Go solar, it’s the neighborly thing to do (when your neighbor has solar)

A new study from Yale University and New York University found that people are more likely to go solar if their neighbors have gone solar. The study, “Peer Effects in the Diffusion of Solar Photovoltaic Panels,” which appeared in the journal Marketing Science, found that the effect of one or more neighbors putting up solar is often contagious...

Solar on a new homeA new study from Yale University and New York University found that people are more likely to go solar if their neighbors have gone solar. The study, “Peer Effects in the Diffusion of Solar Photovoltaic Panels,” which appeared in the journal Marketing Science, found that the effect of one or more neighbors putting up solar is often contagious and not in a bad, ‘I’ve got a cold’, type of way, more like infectious laughter. In fact, the impact of neighbors with solar can more than double the likelihood that others in the neighborhood will install solar, according to the study.

The researchers focussed on clusters of solar installations in California, looking at how solar grew within zip codes over the decade from January 2001 to December 2011. Ultimately it found that residents within a zip code are more likely to install solar if it’s already elsewhere in the zip code or on a the homeowner’s street. The researchers, Bryan Bollinger of NYU and Kenneth Gillingham of Yale, determined that 10 extra installations in a zip code increase the probability of another homeowner adopting solar by 7.8 percent. If a zip code experiences a 10 percent increase in solar installations, the adoption of solar will increase by 54 percent, they said.

The study looks into how peer interaction influences people’s purchasing decisions. Particularly in terms of new technologies and sustainable goods like solar. The study was designed to help marketers and policymakers help speed adoption of solar. The authors said the study can help solar installers design strategies to increase referrals and reduce customer acquisition costs.

“We looked at the influence that the number of cumulative adoptions—the number of people who already installed solar panels in a zip code—had on the probability there would be a new adoption in that zip code,” said Kenneth Gillingham, the study’s co-author and assistant professor of economics at the Yale School of Forestry & Environmental Studies. California likely is the best or easiest market to study because of its high adoption rates and the California Solar Initiative, which helps track residential installations and more in the state.
 
Two of the biggest factors are visibility and word-of-mouth, according to Gillingham. “If my neighbor installs a solar panel and tells me he’s saving money and he’s really excited about it, it’s likely I’ll go ahead and do the same thing,” he said. “Then there are others who’ll install because they don’t want to be one-upped by their neighbors.”

People with longer commutes and larger families were more likely to see more solar installations and were more likely to go solar themselves. The research also found that homeowners, particularly white males between 45 and 65 with a 30 minute commute and in need of home repairs had higher adoption rates. But Gillingham suggested that the high number of Silicon Valley engineers in California could be a partial explanation for the result. 

 

 

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