Microeconomics of the Solar Rebound under Net Metering

Title: Microeconomics of the Solar Rebound under Net Metering(link is external)
Format: Journal Article
Publication Date: 2025
Published In: Journal of the Association of Environmental & Resource Economists
Description:

Residential solar photovoltaics generate 'green' electricity, but may also lead to an increase in household electricity consumption---a phenomenon termed the 'solar rebound effect.’ This paper develops a theoretical framework for understanding the solar rebound. We show that the solar rebound is inherently linked to the net metering compensation a household faces. While the solar rebound is often simply a pure income effect, it can also include a substitution effect in some policy contexts. A negative solar rebound is even possible. We derive the welfare effects of the solar rebound and provide insights for econometric estimation.

Ivan Allen College Contributors:
External Contributors: Juan Moreno-Cruz, Kenneth T. Gillingham
Citation:

Oliver, M.E., Moreno-Cruz, J., & Gillingham, K., (2025). Microeconomics of the Solar Rebound under Net Metering. Journal of the Association of Environmental & Resource Economists. Forthcoming.

Related Departments:
  • School of Economics