Drivers of growth in commercial-scale solar PV capacity

This paper examines the impact of policy incentives for solar power on capacity growth of the commercial market segment. We use county level data from 2005 to 2013 for 13 states in the Northeast United States including the District of Columbia. In estimating the relationship between incentives and solar PV capacity, we control for insolation, market factors, and demographic characteristics. We also account for indicators of pro-environmental attitudes and preferences for solar technology. Results indicate that factors affecting financial returns from a solar PV installation like electricity price and insolation are highly significant. Among policy variables, rebates, solar renewable energy credit price, and sales tax waivers are significant, along with years of Renewable Portfolio Standard implementation. Indicators of environmental preferences and familiarity with solar technology are not as important, which is in contrast with findings in the residential solar market. This suggests that commercial installations are driven mostly by its promise of financial returns, and continued growth in this market segment is likely to depend on falling installation costs and availability of incentives.