Solar Panel Adoption Subject To Peer Pressure
October 19, 2012

Keeping Up With The Joneses – Solar Panel Style

redOrbit Staff & Wire Reports - Your Universe Online

Do your neighbors have solar panels? If so, there´s a greater chance you may also have them installed, according to a Yale and New York University study published in the journal Marketing Science.

The researchers studied clusters of solar installations throughout California from January 2001 to December 2011, and found that residents of a particular zip code were more likely to install solar panels if they already existed in that zip code and on their street.

"We looked at the influence that the number of cumulative adoptions–the number of people who already installed solar panels in a zip code–had on the probability there would be a new adoption in that zip code," said study co-author Kenneth Gillingham, assistant professor of economics at the Yale School of Forestry & Environmental Studies.

"Our approach controls for a variety of other possible explanations, including clustering of environmental preferences or marketing activity."

The scientists calculated that an increase of 10 additional solar installations in a zip code increased the probability of an adoption by 7.8 percent. A 10 percent increase in the total number of people with solar panels in a zip code – the "installed base" – resulted in a 54 percent increase in the adoption of solar panels, the researchers reported.

"These results provide clear evidence of a statistically and economically significant effect," said study co-author Bryan Bollinger, assistant professor of marketing at New York University Stern School of Business.

The study also found that the visibility of the panels, along with word-of-mouth, led to larger installations.

"If my neighbor installs a solar panel and tells me he's saving money and he's really excited about it, it's likely I'll go ahead and do the same thing," said Gillingham.

"Then there are others who'll install because they don't want to be one-upped by their neighbors."

The researchers found that white males between the ages of 45 and 65 who have a 30-minute commute and perform home repairs were linked with higher adoption rates.

Gillingham suggested that a disproportionate number of engineers working in Silicon Valley might explain the study´s results. Additionally, larger households and people with longer commutes had more exposure to solar installations, making them more likely to adopt the technology.

"These findings have clear implications for marketers who are striving to reduce the high cost of consumer acquisition in the solar photovoltaic market," said Bollinger.

In January 2006 the California Public Utilities Commission established the California Solar Initiative, a $3.3 billion, 10-year rebate program promoting the installation of 3,000 megawatts of solar infrastructure over the ensuing decade.

The researchers said these subsidies have increased the number of solar installations from fewer than 1,000 in 2001 to 17,000 in 2010. The calculations were based on the 85,046 requested residential installations during that time.

"Our finding of an increasing effect of new installations in a zip code suggests that targeting marketing efforts in areas that already have some installations is a promising strategy," said Gillingham.