The rebound effect of solar panel adoption: Evidence from Dutch households

Households adopt solar panels for different reasons, but usually with a reduced electricity bill in mind. However, the access to solar power at near zero marginal costs may well induce rebound effects which shift households' demand curve and distort the net effects of solar PV investments. By analyzing high frequency data on household electricity consumption and production, we document solar PV rebound effect of 7.7 percent, a result that is robust to different sample and model specifications. We also find that households shift their consumption to the time periods when solar electricity production is higher. The solar PV rebound effect shows heterogeneity across time and production level, with higher rebound effects during seasons characterized by higher solar irradiance.

Automated summary

Households adopt solar panels mainly to reduce electricity bills, but the near zero marginal cost of solar power may lead to rebound effects that alter households' demand curve and distort the net effects of solar PV investments. Our analysis of high frequency data on household electricity consumption and production reveals a robust solar PV rebound effect of 7.7%, which is consistent across different sample and model specifications. We also observe that households shift their consumption to periods of higher solar electricity production. The solar PV rebound effect varies with time and production level, with larger rebound effects during seasons with higher solar irradiance.