Arbeitspapier

Optimal Subsidies for Residential Solar

We study the optimal design of spatially-differentiated subsidies for residential solar panels. We build a structural model of solar panel demand and electricity production across the US and estimate the model by combining 1) remotely sensed data on residential solar panels, 2) power-plant-level data on hourly production and emissions, and 3) a state-of-the-art air pollution model. The current subsidies lead to severe spatial misallocation. The optimal cost-neutral reform generates a 6-11% increase in the environmental benefits of residential solar panels. National funding for subsidies under the current system exceeds the unconstrained optimum by over ten-fold.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 10446

Classification
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Alternative Energy Sources
Energy: Government Policy
Subject
rooftop solar
optimal taxation
renewable energy

Event
Geistige Schöpfung
(who)
Colas, Mark
Saulnier, Emmett
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2023

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Colas, Mark
  • Saulnier, Emmett
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2023

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