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Household Responses to the Tax Treatment of Income from Solar PV Feed-in in Germany

Author

Listed:
  • Jannik Fleiter

    (RWTH Aachen university)

  • Ayse Tugba Atasoy

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Reinhard Madlener

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

In this paper, we examine the significance of compliance costs in the context of solar photovoltaics deployment and installed capacity decisions by private households in Germany. We investigate possible adverse effects of feed-in remuneration schemes induced by tax compliance costs. More specifically, we study how private households respond to a tax policy instruction issued by the German Federal Ministry of Finance in June 2021, which enables to avoid the tax compliance obligations if the installed capacity does not exceed 10 kWp. A decision model and two different empirical models are employed to show how such compliance costs may distort both deployment decisions and capacity choices. We find that the tax instruction led to a change in the capacity distribution of newly built PV systems towards 50-65% intensified excess bunching slightly below 10 kWp, leading to inefficient use of rooftop space. Lack of crosssectional variation in the data and a large number of confounding events in the observation period calls for further research to corroborate our findings.

Suggested Citation

  • Jannik Fleiter & Ayse Tugba Atasoy & Reinhard Madlener, 2023. "Household Responses to the Tax Treatment of Income from Solar PV Feed-in in Germany," FCN Working Papers 8/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2023_008
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    References listed on IDEAS

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    Cited by:

    1. M. Nieves Casas Ferrús & Oliver Ruhnau & Reinhard Madlener, 2023. "Portfolio Effects in Green Hydrogen Production Under Temporal Matching Requirements," FCN Working Papers 18/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    2. Yannick Schöpper & Claas Digmayer & Raphaela Bartusch & Ola Ebrahim & Sarah Hermens & Razieh Nejabat & Niklas Steireif & Jannik Wendorff & Eva-Maria Jakobs & Frank Lohrberg & Reinhard Madlener & Susan, 2023. "Developing a Niche Readiness Level Model to Assess Socio-Economic Maturity: The Case of DC Technologies in the Transition to Flexible Electrical Networks," FCN Working Papers 11/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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