Light after the darkness: Estimating the impact of power outages on subsequent solar installations

Unexpected shocks to the electricity supply can influence people’s decision to invest in renewable energy, particularly when these technologies serve as substitutes for backup power. This study investigates the impact of a large-scale power outage on subsequent photovoltaic (PV) installations and examines how households and firms evaluate the expected benefit of PV systems as an emergency power source. Using a doubly-robust difference-indifferences design, we exploit the 2018 Hokkaido Eastern Iburi Earthquake in Japan as a natural experiment to estimate the effect of the subsequent blackout on municipality-level PV installations. Our results show that the blackout significantly increased commercial PV installations but had no effect on residential installations. In particular, commercial PV capacity rose by 3.900 kW per 1,000 people per half-year following the blackout. Additional analysis suggests that the intermittent nature of solar power may limit the reliability of residential PV systems during emergencies, especially under adverse weather conditions. These findings highlight the need to address intermittency to enhance the role of PV systems as a resilient infrastructure.