Household Willingness to Pay for Various Attributes of Residential Solar Panels : Evidence from a Large Discrete Choice Experiment

The predominant approach in the US environmental policy has been to offer incentives for renewable energy as a more palatable alternative to market-based policies favored by economists. The policies targeting rooftop solar have been in line with this approach. However, recently there has been a reversal in the lucrative terms for residential solar across many states. Is residential solar likely to keep expanding if financial incentives are dwindling? With this in mind, we implemented a large stated preference discrete choice experiment. Respondents are asked choose from home energy options offering varying financial terms and other attributes such as self-reliance and battery. The study also features a randomized control trial component where the treatment group is presented with the net present value (NPV) information of the alternatives, while for the control group this information is suppressed. We first estimate the utility coefficients via hierarchical Bayes mixed logit and then construct willingnesses to pay (WTPs) together with their confidence intervals at the individual level. We find that there is significant heterogeneity in preferences which are not explained by demographic variables. Our results also show that the WTPs elicited from the treatment group are significantly less than those of the control group