Distributional Benefits of Rooftop Solar Capacity

Abstract

This paper explores the distribution of environmental benefits created by rooftop solar capacity in the United States. We find that benefits are increasing with income, indicating regressivity, but that households of color receive greater per capita benefits on average. Moreover, we document minimal efficiency-equity trade-off: capacity allocations that maximize total environmental benefits are nearly identical to allocations that maximize benefits received by disadvantaged groups. Thus, existing solar capacity forgoes up to $2 billion annually in environmental benefits as well as substantial improvements in distributional outcomes, further suggesting that the suboptimality of existing solar policy cannot be rationalized on equity grounds.