Solar Adoption by Mandates

Rooftop solar photovoltaic mandates are becoming a popular policy across Europe and the United States. In this paper, we leverage the frontrunner experience of California to examine their economics. First, we evaluate the private payoffs of solar adoption for residential new construction. To do so, we assemble a rich dataset of new construction building projects and parameterize an engineering model to provide estimates of private payoffs across our sample. Second, we evaluate the hypothesis of what we call a "solar gap'' by comparing the cost-effectiveness estimates from the engineering model to observed builder decisions. We find substantial variation in the cost-effectiveness of solar across building locations and characteristics, though the estimated private payoffs are generally positive across a robust variety of model parameterizations and financial assumptions. We observe that the majority of buildings in our data do not adopt solar despite engineering estimates suggesting opportunities for positive payoffs. Relatedly, we find that payoffs explain little of the variation in solar adoption decisions. Lastly, we estimate the effectiveness of both San Francisco's citywide solar mandate and California's statewide mandate. Across a variety of empirical approaches, we find that both the citywide and statewide mandates increased solar adoption. However, new construction solar adoption remains below 100 percent. We discuss compliance accordingly.