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SMU SOE Seminar Series (September 24, 2025): Means-Tested Solar Subsidies

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TOPIC:

MEANS-TESTED SOLAR SUBSIDIES

ABSTRACT

We study the design of income-contingent subsidies for residential solar panels. We develop sufficient statistics for evaluating the cost-effectiveness of means-tested subsidies and estimate them using remotely sensed data on solar panel installations across the US and a border-discontinuity design. Our estimates reveal that the responsiveness of installation rates to subsidies is strongly decreasing in income. Using these empirical estimates, we estimate a structural model that embeds a
solar adoption decision into a dynamic consumption/savings framework with borrowing constraints. Counterfactuals reveal that switching to production-maximizing income-contingent solar subsidies leads to a nearly three-fold increase in public funds received by low-income households and a 2.4% increase in national solar production. Means-tested subsidies are justified on equity and efficiency grounds.

Keywords: Rooftop Solar, Subsidies, Renewable Energy.

JEL: H21, H23, Q42, Q48.

Click here to view the CV.
Click here to view the paper.

PRESENTER

Mark Colas
University of Oregon

RESEARCH FIELDS

Labor Economics
Public Economics

DATE:

24 Sep 2025 (Wed)

TIME:

4:00pm - 5:30pm

VENUE:

Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903

 
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