Evaluating the role of state and federal incentives in residential solar adoption: Evidence from Nevada

Abstract

This study examines how state and federal incentives affect rooftop solar adoption in Nevada using contract-level data from 99 customers between 2017 and 2023. A fixed-effects regression framework is applied to isolate the effects of rebates, tax credits, utility rates, and vendor behavior on system prices. The analysis reveals that state-level rebates significantly reduce upfront costs: a $1000 increase in rebate support corresponds to an average $0.09/W reduction in system price. In contrast, federal Investment Tax Credits show limited price-lowering effects and may indirectly raise quoted prices, consistent with subsidy pass-through behavior. Nevada’s retail electricity rates emerge as the most significant determinant of pricing, with higher rates associated with an increase of nearly $27–31/W in average system costs, reflecting vendors’ ability to price against the utility benchmark.

The results demonstrate that state rebates provide the clearest pathway to lowering customer costs and accelerating adoption, while federal incentives require regulatory safeguards to ensure consumer benefit. These findings carry important implications for renewable energy policy, particularly in regulated markets where vendor pricing strategies can dilute the effectiveness of national subsidies. Overall, the evidence highlights the critical role of targeted state policies and competitive vendor oversight in advancing affordability, market participation, and progress toward renewable energy and climate goals.