Equity of Incentives: Agent-Based Explorations of How Social Networks Influence the Efficacy of Programs to Promote Solar Adoption

Abstract

Agent-based models are used to explore how social networks influence the effectiveness of governmental programs to promote the adoption of solar photovoltaics (solar PV) by residential households. This paper examines how a common characteristic of social networks, known as network segregation, can dampen the indirect benefits of solar incentive programs that arise from peer effects. Peer effects cause an agent to be more likely to adopt a technology if they are socially connected to other adopters. Due to network segregation, programs that target relatively affluent agents can generate rapid increases in overall adoption levels but at the cost of increasing disparities in access to solar technology between rich and poor communities. These dynamics are explored through theoretical agent-based models of solar adoption within hypothetical social systems. The effectiveness of three types of solar incentive programs, the feed-in tariff, leasing programs, and seeding programs, is explored. Even though these programs promote rapid adoption in the short term, results demonstrate that network segregation can create serious distributional justice problems in the long term for some programs. The distributional justice effects are particularly severe with the feed-in tariff. Overall, this paper provides an illustration of how agent-based models may be used to evaluate and experiment with policy interventions in a virtual space, which enhances the scientific basis of policymaking.