Toward an optimal household solar subsidy: A social-technical approach. (15th March 2018)

• Record Type: Journal Article
• Authors: Liu, Shen; Colson, Gregory; Hao, Na; Wetzstein, Michael
• Is Part Of: Energy. Volume 147(2018)
• Page Start: 377
• Page End: 387
• Publication Date: 2018-03-15
• Subjects: Marginal external benefit -- Motivational crowding -- Optimal subsidy -- Prosocial evaluation -- Solar photovoltaic (PV); Q2 -- Q4 -- Q5; Power resources -- Periodicals; Power (Mechanics) -- Periodicals; Energy consumption -- Periodicals; 333.7905
• DOI: 10.1016/j.energy.2018.01.038
• Languages: English
• ISSNs: 0360-5442

Abstract

Abstract: An analytical framework is developed for integrating the social science into a socio-technical approach for assessing the optimal solar energy subsidy. Estimating the optimal solar subsidy based on the analytical framework takes into account technical environment, health, employment, and electricity accessibility benefits as well as household's prosocial behavior. Results indicate that an optimal subsidy is positively affected by the marginal external benefit; however, this effect is mitigated by the rebound effect based on motivational-crowding theory. Calibrating the model using published elasticities yields estimates of the optimal solar energy subsidy equal to approximately $0.02 per kilowatt-hour when prosocial behavior is omitted. The estimated optimal subsidy is in line with many current state feed-in-tariff rates, which may be the upper bound when social science is not considered in policy analysis. Highlights: Integrate social science into a socio-technical approach for assessing energy subsidies. Derive the optimal household solar energy subsidy from an indirect utility function. If fossil energy is an inferior good, then a subsidy yields less fossil energy consumption. Estimate of the optimal residential solar subsidy is in line with current feed-in-tariff rates.