Modeling the Diffusion of Residential Photovoltaic Systems in Italy: An Agent-based Simulation

We propose an agent-based model to simulate the diffusion of small PV systems among single- or two-family homes in Italy over the 2006-2026 period. To this end,we explicitly model the geographical distribution of the agents in order to account for regional differences across the country. The adoption decision is assumed to be influenced predominantly by (1) the payback period of the investment, (2) its environmental benefit, (3) the household’s income, and (4) the influence of communication with other agents. For the estimation of the payback period, the model considers investment costs, local irradiation levels, governmental support, earnings from using self-produced electricity vs. buying electricity from the grid, as well as various administrative fees and maintenance costs. The environmental benefit is estimated by a proxy for the CO2 emissions saved. The level of the household income is associated with the specific economic conditions of the region where the agent is located, as well as the agent’s socio-economic group (age group, level of education, household type). Finally, the influence of communication is measured by the number of links with other households that have already adopted a PV system. In each simulation step, the program dynamically updates the social system and the communication network, while the evolution of the PV system’s investment costs depend on a one-factor experience curve model that is based on the exogeneous development of the global installed PV capacity. Our results show that Italy’s domestic PV installations are already beyond an initial stage of rapid growth and, though likely to spread further, they will do so at a significantly slower rate of diffusion.