Description: Job Market Talk: Jian Chen
Location: 368A Heady Hall
Contact: Otávio Bartalotti
Title: Crowding-in or Crowding-out: Assessing the Role of Distributed Generation Solar Photovoltaic in Utility-scale Solar Development
Abstract: Utility-scale solar photovoltaic (USP) systems play a critical role in decarbonizing the power grid and leading the U.S. toward a clean energy future. In addition to promoting the deployment of USP, federal and state governments and different market agencies have launched a number of financial incentives to attract households to invest in distributed generation solar photovoltaic (DGSP) systems. This paper seeks to assess the role of DGSP in developing USP and answer whether the incentives to encourage investment in the DGSP system could eventually crowd in or crowd out the cost-efficient option, USP. Using U.S. county-level panel data from 2012 to 2020 and a simultaneous equation model with a 2SLS method, this paper investigates the impacts of DGSP on the investment of USP. Our results suggest a significant crowding-out effect of new DGSP investment on USP capacity additions. Specifically, an increase in DGSP capacity additions of 1 MW DGSP capacity results in a decrease in USP capacity additions of 1.67 MW. Our study provides new perspectives to the existing literature seeking to understand the drivers of USP adoption in the United States and the linkage with DGSP. The findings should interest policymakers seeking to understand the optimal policy design to foster solar power development.