This paper studies the nature of municipal building codes restricting solar adoption and how such local measures impact the adoption of solar photovoltaics. It focuses on Germany, a leader in solar adoption. The authors show that national policies promoting the adoption of solar photovoltaics are partially counteracted by local policies defining the aesthetics of the built environment. These findings raise important questions on the (cost-)effectiveness of nationwide efforts promoting the adoption of renewable energy to increase energy security and to contribute to mitigate climate change.

The study documents that a significant share of German municipalities have amended their building codes to restrict solar installations, often to preserve the historical nature of towns, and that these restrictions have an economically important impact on solar adoption. Using a unique survey of municipalities collecting information about their building codes, and administrative data on all solar installations in Germany, the authors show that municipalities that implement municipal building codes aimed at restricting solar adoption have 10.4% less solar photovoltaic capacity than municipalities in the control group.

The findings have important policy implications: there is a trade-off between national (and even global) climate change mitigation as well as energy security goals and local heritage preservation goals. As countries accelerate their transition towards a cleaner economy and seek to minimise their dependence on imports of energy from foreign sources, municipal policies potentially need to be reevaluated, also accounting for technological developments that increasingly make solar photovoltaics less aesthetically invasive.

Key points for decision-makers

  • The authors created a registry of local solar policies (i.e. municipal building codes restricting solar adoption) based on survey responses from municipal officials in Germany. The survey asked how current local building codes treat the installation of solar panels as well as how past local building codes did. The survey also tracked information on the specific areas of municipalities covered by such restrictions, wherever coverage was not municipality-wide.
  • Regulations of solar installations in some cases include explicit bans or permit requirements. Other municipalities have more subtle provisions, for example such that solar installations cannot be visible from the street.
  • The paper confirms and quantifies the trade-off between national and global climate change mitigation and energy security goals and local historical preservation policies.
  • The authors show that many German municipalities regulate and restrict the installation of solar photovoltaics. A significant portion (15.1%) of municipalities in the sample have one or more provisions in their building codes targeted at solar photovoltaics.
  • Municipalities that implement any type of policy have 8.9% fewer solar photovoltaic installations and a 10.4% smaller solar capacity than similar municipalities without such policies. The larger effect on solar capacity shows that municipal policies lead to less adoption of solar (referred to as the ‘extensive margin’) as well as smaller installations, conditional on adoption (referred to as the ‘intensive margin’). Reductions in solar adoption are driven mostly by small to medium-sized installations of 5–10 kW, consistent with the policy goals of shaping the urban built environment.
  • The authors conclude that it is crucial for policymakers in Germany, and in other locations where such local restrictions are widespread, to take a closer look at the trade-off with heritage preservation.

Policymakers should determine whether these restrictions are still warranted in the current environment and whether they will be in the future, as technology evolves. For instance, allowing photovoltaic roof tiles that blend into the built environment could expand solar capacity in historical towns and other areas where similar aesthetic considerations apply.

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