From: Dani Thé, ENN
Published October 22, 2012 03:26 PM

Solar Power Adoption is Contagious

Apparently doing something good can be contagious. Or at least this seems to be the case with solar power adoption. According to a study by Yale and New York University, published though Marketing Science, individuals are most likely to install solar panels on their home if one of their neighbors has also done so.



The study, "Peer Effects in Diffusion of Photovoltaic Panels", took a close look at solar installation clusters between January 2001 and December 2011 throughout the state of California. They found that a resident was most likely to install solar panels if solar panels had already been installed within that resident’s same zip code.

"Our approach controls for a variety of other possible explanations, including clustering of environmental preferences or marketing activity", said Kenneth Gillingham, co-author of the study and assistant professor of economics at Yale School of Forestry and Environmental Studies.

The results were statistically significant, revealing that for every 10 additional solar panel installations in a zip code, the probability of solar panel adoption increases by 7.8 percent.

The study also suggests the influence of solar panel visibility and word-of-mouth in the adoption rates of solar panel technology. Bryan Bollinger, co-author of the study and assistant professor of marketing and New York University Stern School of Business notes, "These findings have clear implications for marketers who are striving to reduce the high cost of consumer acquisition in the solar photovoltaic market".

Bollinger and Gillingham hope that this information can provide policy makers and marketers with valuable insight into structuring subsidies for solar technology and improving customer acquisition strategies.

However, without governmental policy measures to create a market for which solar panel installations are desirable, initial installations by a household in a zip code area remains the principal challenge. Without it, a likelihood of adoption domino effect is minimal.

An example of such policy required to kick-start solar technology adoption rates is the "California Solar Initiative". Established in 2006 by the California Public Commission, it played an integral role of encouraging solar infrastructure installations. Ten years since its establishment, the 3.3 billion dollar, 10-year rebate program encouraged the installation of over 3,000 megawatts of solar infrastructure. This study provides insight into the diffusion process of solar technology infrastructure, and also encourages policy makers to take action. It will require both governmental guidance and business strategy to take full advantage of these findings, so that solar technology adoption rates can quickly grow. The hope is that future studies will discover that the diffusion of other environmentally friendly technologies are just as contagious as solar is.

Solar panels on house image via Shutterstock

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