The impact of attribute preferences on adoption timing: The case of photo-voltaic (PV) solar cells for household electricity generation

Abstract

We are concerned with micro-generation, individual households generating electricity using a renewable energy technology. We focus on modelling the adoption probability of photovoltaic solar panels by a household. Using data collected from an area of Canada where a generous feed-in tariff is available to households generating electricity from solar panels, we measure household level preferences for panels and use these preferences along with household characteristics to predict adoption time intentions. We use recent developments in measuring household level preferences for innovations via discrete choice experiments and establish a causal link between the attributes of the technology and adoption time intentions using discrete time survival mixture analysis. Significant preferences included lower cost, greater energy savings and lower fossil fuel inflation. Estimation of hazard probabilities showed that the significant preferences had intuitively reasonable effects. The hazard probabilities allow us to compute cumulative probability of adoption over a ten year period per household. Technology awareness has a significant effect on the adoption probability, reinforcing the need for effective education. Our approach indicates the level of heterogeneity in preferences, particularly high for investment criteria and CO 2 emissions. These findings suggest that education campaigns should explain more about investment criteria, feed-in tariffs and environmental effects. IntroductionGrowing energy demand, finite fossil fuel supplies, worries about energy security and environmental concerns are all factors encouraging the increasing use of renewable resources for electricity generation. Here, we are concerned with micro-generation, where individual households generate electricity using a renewable energy technology. This is a potentially very significant energy source as individual households account for one third of all energy consumption in USA (see Stern, 1992). We focus on the adoption of photo-voltaic solar panels by households. Data are gathered about the intentions and preferences of households to discover the determinants of whether households will adopt a solar panel installation and, if so, when they are likely to do so.Energy policy analysis tends to prioritize technology and cost reduction considerations over a detailed understanding of household preferences. As noted by Stern (1992), the technical economic style of analysis is indispensable, but is lacking in both conceptual tools and understanding of how households (and social systems) can be changed to achieve policy objectives. The diffusion of new micro-generation technologies, such as photo-voltaic solar panels, is generally thought to be slow due to the conflict between the economic costs and the environmental benefits. In one of the more attractive markets, the residential sector, where individual households generate electricity on a small scale (less than 10 kWh), the resource and environmental advantages of photo-voltaic cells over conventio...

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