Effects of local government subsidy on rooftop solar PV in Japan

Abstract

This paper evaluates the impact of local government capital investment subsidies for the installation and the price of rooftop solar photovoltaic (PV) system in Japan. By creating the micro-level unique panel dataset covering the period between 2009 and 2014, we compared municipalities that employed subsidies with municipalities that did not to analyze their effects on the amount of installation and the system prices. Our results indicated that the municipal subsidies significantly induced the installation of rooftop PV although their effects depended on the several conditions such as income. On the other hand, we found no evidence of an effect on rooftop PV's system price reduction in municipalities with higher exposure to the subsidies. Subsidies rather seemed to have an effect to raise prices up.