“We found that there is a positive, statistically significant, causal effect of previous nearby installations on a household’s decision to adopt solar panels,” said Bollinger. “A one percent increase in the zip code installed base leads to approximately a one percent increase in the zip code adoption rate.”
At the street level, the contagion effect is even stronger. The study found that an average California street with at least one solar installation, a one percent increase in the street’s installed base leads to a more than nine percent increase in the street-level adoption rate.
"I find the results convincing. That is so partly because of the methodological strengths of the research and partly because the results are consistent with earlier research showing peer effects in a variety of other arenas,” said Robert Cialdini, a leading social psychologist and an emeritus professor at Arizona State University. “For example, we now have evidence for contagion among peers of both cigarette smoking initiation and smoking cessation [and] of both weight gain and weight loss.”
To maximize solar adoption rates, solar companies should therefore seek to facilitate peer effects.
“Solar installers may be well-advised to keep these peer effects in mind in designing their marketing strategies,” said Gillingham.
“I’d suggest doing what one automotive dealer told me has been his most successful (ever) marketing strategy: Send sales/marketing offers to people who live on the same street as your last customer,” said Cialdini.
Indeed, forward-thinking installers and utilities may already market solar with peer effects in mind.
“For example, SolarCity tries to get a few people in a neighborhood to proselytize the virtues of solar,” said Gillingham. “Similarly, Pacific Gas and Electric and the California Solar Initiative (CSI) developed a ‘Neighborhood Solar Champions’ program in San Francisco.”
In analyzing solar installation trends, it is therefore important to control for the effect of existing marketing efforts.
“We do see significant clustering of residential customer solar systems in certain neighborhoods, and that the number of installations in our CSI Program in a given area often accelerates after the first few projects,” said Gary Barsley, Manager of Customer Self-Generation Programs at Southern California Edison. “This effect may be due to in part to the ‘peer effect’ mentioned, but is also probably due to the fact that additional solar contractors and installers move in to actively market their projects in neighborhoods that have started to show interest in solar systems.”
Bollinger and Gillingham “completely agree” that the solar contractors that already engage in localized marketing likely encouraged the clustering of solar installations. However, they believe that their study effectively controlled for localized efforts and isolated the peer effect.
“First, we control for any factors that change at the zip code level in any given quarter,” said Gillingham. “Thus, if solar contractors choose their marketing efforts every quarter or so… we have fully controlled for the issue.”
“Second, our modeling strategy focuses on the relationship between the difference in the number of installations in a zip code from one day to the next to the difference in the adoption rate,” continued Gillingham. “We [therefore] know that our model is correctly or ‘consistently’ estimated as long… solar contractors [do not] change their marketing strategy every single time they install another solar PV system.”
About the Author - Yoni Cohen
I’ve worked for cleantech venture capital firms in San Francisco and Israel and reported about environmental innovation for the Los Angeles Times, Business Week, Greentech Media, GreenBizand VentureBeat. I'm a student at the Yale Law School and a former college basketball writer for Fox Sports. Before school, I worked on Capitol Hill and on presidential, gubernatorial and congressional campaigns. As an advisor to candidates throughout the western United States, I helped to elect eight Members of Congress, including wind energy engineer-turned Congressman Jerry McNerney. Follow me on twitter @Cohen_Yoni.