Imagine a household that consumes 1,000 kilowatt hours of energy per month. Then they install solar panels on their roof that generate 500 kilowatt hours of electricity per month on average. How much should their consumption of electricity drawn from the power grid decline after they install solar? Five hundred kilowatt hours is the expectation, but in reality, it’s less than that for most people. Now, they’re consuming more than 1,000 kilowatt hours per month.
This paradox is called the solar rebound effect: the ratio of the increase in energy consumption to the amount that is generated by the solar panels. In new research out of the Georgia Institute of Technology, Matthew Oliver, an associate professor in the School of Economics, presented this argument for how the economics of solar power really work, in “Tipping the Scale: Why Utility-Scale Solar Avoids a Solar Rebound and What It Means for U.S. Solar Policy,” published in The Electricity Journal.
“Getting people to adopt this technology does reduce their reliance on conventional energy sources, but not by as much as you think,” Oliver said. “This is because people end up increasing their electricity consumption after adopting solar panels, as an economic and behavioral response.”
Abstract
Adoption of residential rooftop photovoltaic (PV) systems is increasingly widespread. However, empirical evidence shows that households who adopt rooftop PV increase total electricity consumption, a response known as the ‘solar rebound effect’ (SRE). The SRE implies that rooftop PV generation displaces conventional, grid-supplied electricity—still overwhelmingly generated by fossil fuel combustion—on a less than one-for-one basis. This article argues that utility-scale solar avoids a SRE because the SRE emerges as a household’s response to the self-generation of electricity by its rooftop PV system, which changes its electricity consumption incentives in ways that utility-scale solar does not. By avoiding a SRE, utility-scale solar allows the carbon reduction potential of increased PV generation capacity to be more fully realized, which has important implications for U.S. solar policy.
Read more: https://doi.org/10.1016/j.tej.2023.107266
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