Where incentives hit the roof: How policy design shapes rooftop solar returns

This study evaluates how existing incentive structures shape the distribution of net present value (NPV) for distributed photovoltaic (PV) systems under real-world physical and tenure constraints. Focusing on Chicago’s Austin neighborhood and the Village of Oak Park, Illinois, we integrate hourly smart-meter demand data, 15cm-resolution rooftop mapping imagery, and a three-scenario factorial financial model to simulate PV capacity and returns under the current federal and local policy stack, with the Investment Tax Credit (ITC) held constant. Results show that spatial variation in NPV is not driven by climate or load patterns, which are nearly identical across the two communities, but by differences in roof geometry and tenure structure. The percentage-based federal ITC produces scale-amplified gains: large commercial roofs capture substantially higher absolute returns than size-constrained residential systems. In contrast, local lump-sum rebates exert only a marginal influence on the overall NPV distribution and do not materially alter the hierarchy created by scale. For low-income households, capital expenditure (CAPEX) dominates the total-effect index (ST≈0.66), indicating that upfront liquidity strongly conditions financial outcomes. Higher-income and commercial actors are more sensitive to electricity price growth and discount rates, reflecting asset-optimization dynamics rather than capital constraint. Methodologically, the coupled object-level rooftop mapping and property-level cash-flow framework provides a transparent and portable workflow using standard orthophotography and smart meter data. By isolating how incentive form interacts with heterogeneous roof scale and demographics, the study offers a finance-explicit account of how policy design structures the distribution of solar returns under existing regulatory conditions.