A model for commercial adoption of photovoltaic systems in California

Abstract

To promote the installations of solar photovoltaic (PV) systems efficiently, it is important to quantify the impact of government incentive programs and solar PV system life-cycle costs on customer adoption. In this paper, a model for commercial solar PV adoption is developed with explanatory variables such as government incentive programs and solar PV system installation costs. The adoption model is built on top of the Generalized Bass diffusion framework. The model is applied to forecast the commercial solar PV adoption in Southern California. Asymptotic standard errors of the parameter estimates are calculated to verify the significance of the explanatory variables. Empirical results show that decreasing solar PV system installation costs and government incentive programs are the main forces that drove the growth of commercial solar PV adoption. In the case of Southern California, we also discover that government incentive programs and PV system installation costs have a much higher impact on large commercial customers than on small commercial customers. Our Generalized Bass diffusion model of commercial solar PV adoption yields a lower root-mean-square error than the basic Bass Diffusion model. In addition, the commercial solar PV adoption model predicted that the eventual adoption rate of solar PV systems is higher for large commercial customers.