Small-scale solar panel adoption by the non-residential sector: The effects of national and targeted policies in Australia

Abstract

Use of solar photovoltaic (PV) panels by the non-residential sector can contribute to climate-change mitigation and boost economic outcomes. Prior studies have primarily focused on the residential sector. Using data from 1595 postcodes across the Australian National Electricity Market, we investigate five novel research questions for non-residential solar-panel adoption. National and sectoral policies, business size, and cross-sectoral influences are found to be key drivers of non-residential solar PV uptake. We find a subsidy elasticity of about 1.2 for Australia’s Small-scale Renewable Energy Scheme (SRES), an economy-wide renewable portfolio standard for small-scale renewables. Residential solar capacity is positively associated with future adoption by the local nonresidential sector, and geographical convergence effects are observed. The findings align with the principle that investment is spurred by policies that lower upfront capital costs. Following Australia’s experience, a small-scale renewable portfolio standard is particularly worthy of consideration for further adoption elsewhere.