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The value of price transparency in residential solar photovoltaic markets

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  • O’Shaughnessy, Eric
  • Margolis, Robert

Abstract

Installed prices for residential solar photovoltaic (PV) systems have declined significantly in recent years. However price dispersion and limited customer access to PV quotes prevents some prospective customers from obtaining low price offers. This study shows that improved customer access to prices – also known as price transparency – is a potential policy lever for further PV price reductions. We use customer search and strategic pricing theory to show that PV installation companies face incentives to offer lower prices in markets with more price transparency. We test this theoretical framework using a unique residential PV quote dataset. Our results show that installers offer lower prices to customers that are expected to receive more quotes. Our study provides a rationale for policies to improve price transparency in residential PV markets.

Suggested Citation

  • O’Shaughnessy, Eric & Margolis, Robert, 2018. "The value of price transparency in residential solar photovoltaic markets," Energy Policy, Elsevier, vol. 117(C), pages 406-412.
    • Handle: RePEc:eee:enepol:v:117:y:2018:i:c:p:406-412
    DOI: 10.1016/j.enpol.2018.03.025
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    1. O'Shaughnessy, Eric, 2019. "Non-monotonic effects of market concentration on prices for residential solar photovoltaics in the United States," Energy Economics, Elsevier, vol. 78(C), pages 182-191.
    2. O'Shaughnessy, Eric & Nemet, Gregory F. & Pless, Jacquelyn & Margolis, Robert, 2019. "Addressing the soft cost challenge in U.S. small-scale solar PV system pricing," Energy Policy, Elsevier, vol. 134(C).
    3. Lau, Lin-Sea & Choong, Yuen-Onn & Wei, Chooi-Yi & Seow, Ai-Na & Choong, Chee-Keong & Senadjki, Abdelhak & Ching, Suet-Ling, 2020. "Investigating nonusers’ behavioural intention towards solar photovoltaic technology in Malaysia: The role of knowledge transmission and price value," Energy Policy, Elsevier, vol. 144(C).
    4. Neij, Lena & Nemet, Gregory, 2022. "Accelerating the low-carbon transition will require policy to enhance local learning," Energy Policy, Elsevier, vol. 167(C).
    5. Kraschewski, Tobias & Brauner, Tim & Heumann, Maximilian & Breitner, Michael H., 2023. "Disentangle the price dispersion of residential solar photovoltaic systems: Evidence from Germany," Energy Economics, Elsevier, vol. 121(C).

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