Distributional justice, effectiveness, and costs of current and alternative solar PV incentive schemes in Switzerland

Abstract

Like many other countries, Switzerland offers various incentives to promote residential solar PV, but not all households have equal access to them. Using a microsimulation approach based on merged data from the Swiss Household Budget Survey and Household Energy Demand Survey, we evaluate the current Swiss incentive scheme in terms of how equally the internal rates of return of PV installations, the amounts of obtainable incentives, and the saving months to accumulate the investment are distributed across households. The current, regionally heterogeneous scheme is then compared with alternative, nationally uniform designs based on the required public spending, effectiveness in promoting profitable and affordable PV, and distributional equality. The current scheme leads to a large disparity in the economic profitability of installations and incentive amounts obtainable across various socio-demographics. Larger, the highest-income, and rural households can obtain more incentives and install more profitable PV systems. Lower-income households must save the longest to install PV. Incentive schemes with a nationally uniform investment grant or a feed-in tariff threshold could offer a good alternative to the current scheme in terms of justice, public spending, and effectiveness. The insights on heterogeneous versus uniform PV incentives and the developed methodology could be transferred elsewhere.

Keywords

• solar photovoltaic
• policy incentives
• distributional justice
• inequalities
• policy evaluation