Sunspots That Matter: The Effect of Weather on Solar Technology Adoption

This paper tests for the presence of behavioral biases in household decisions to adopt solar photovoltaic installations using exogenous variation in weather. I find that residential technology uptake responds to exceptional weather, defined as deviations from the long-term mean, in line with the average time gap between decision-making and completion of the installation. In particular, a one standard deviation increase in sunshine hours during the purchase period leads to an approximate increase of 4.7% in weekly solar PV installations. This effect persists in aggregate data. I consider a range of potential mechanisms and find suggestive evidence for projection bias and salience as key drivers of my results.

Automated summary

This study examines the influence of behavioral biases on household decisions regarding the adoption of solar photovoltaic installations by using exogenous weather variations. The research shows that residential technology uptake is responsive to exceptional weather, which is defined as deviations from the long-term mean and aligns with the average time gap between decision-making and installation completion. Specifically, a one standard deviation increase in sunshine hours during the purchase period results in an approximate 4.7% increase in weekly solar PV installations. This effect persists in aggregate data. The study suggests that projection bias and salience are key drivers behind these findings.