Study Reveals Solar Power is Contagious

Did you know that solar power is contagious? The latest finding from the Yale and New York University comes as a surprise because they claim that people are more likely install a solar panel on their home if their neighbors have one.

For this purpose the researchers studied clusters of solar installations throughout California from January 2001 to December 2011. On doing so they noticed that the residents of a particular zip code are more likely to install solar panels if they already exist in that zip code and on their street.

"We looked at the influence that the number of cumulative adoptions -- the number of people who already installed solar panels in a zip code -- had on the probability there would be a new adoption in that zip code," said Kenneth Gillingham, the study's co-author and assistant professor of economics at the Yale School of Forestry & Environmental Studies. "Our approach controls for a variety of other possible explanations, including clustering of environmental preferences or marketing activity."

The researchers estimated that, 10 extra installations in a zip code increase the probability of an adoption by 7.8 percent.  If there is a 10 percent increase in the total number of people with solar panels in a zip code there will be a 54 percent increase in the adoption of solar panels.

"These results provide clear evidence of a statistically and economically significant effect," said Bryan Bollinger, the other co-author and assistant professor of marketing at New York University Stern School of Business.

Simultaneously the study reveals that the visibility of the panels and word-of-mouth led to larger installations.

"If my neighbor installs a solar panel and tells me he's saving money and he's really excited about it, it's likely I'll go ahead and do the same thing," said Gillingham. "Then there are others who'll install because they don't want to be one-upped by their neighbors."

The researchers found that white males between the ages of 45 and 65 who have a 30-minute commute and home repairs were associated with higher adoption rates. In addition, larger households and people with longer commutes were more exposed to solar installations, thus more likely to adopt the technology, compared to people who carpooled and lived in smaller households.

"These findings have clear implications for marketers who are striving to reduce the high cost of consumer acquisition in the solar photovoltaic market," said Bollinger.