Power Move: Solar Adoption Among Firms
How green technologies can diffuse among potential adopters is a key question for climate change mitigation. I consider the case of photovoltaic panels (PV) adoption by firms in Brazil and evaluate the patterns of adoption and the mechanisms behind the choice of investing in solar generation. Using reduced-form evidence on the investment pattern across locations and firms, I find that higher energy prices are positively correlated with higher adoption, indicating that firms switch to solar generation more often when gains from lower energy bills are greatest, and that adoption was higher where energy tariff subsidies represented larger shares of the total energy bill. To back out the mechanisms behind this decision, I estimate a discrete-continuous choice model of adoption and run counterfactual policy scenarios to evaluate potential alternative diffusion incentives.