Value Accrual to Customers, Installers, and Financiers in Third-Party Owned Solar PV Markets

Beyond the Federal Investment Tax Credit, the two primary financial incentives provided by residential solar photovoltaic (PV) systems are electricity bill savings and state and local government incentives. Using transaction-level data on third-party owned systems from 2012-2015, we estimate how value associated with these incentives are passed along the installer-financier-consumer supply chain in the third-party owned market. Our analysis finds evidence of financial incentive pass-through to system prices and customer payments with respect to both types of incentives. Moreover, we document differences in the levels of pass-through for different contract types: total pass-through to customer payments for both types of incentives is greater for PPAs than for UFOs. We find some evidence that pass-through rates to customer payments for PPAs change with market concentration. Finally, we illustrate that the magnitude of estimated pass-through changes for PPAs if we account for simultaneity between system prices and customer payments.