From energy consumers to prosumers: the role of peer effects in the diffusion of residential microgeneration technology

In this work we study incentives and determinants which spur energy consumers to invest in a new technology, focusing on the UK residential adoption of microgeneration technology which uses solar photovoltaic systems. In particular, we focus on how the presence at the regional level of community energy organizations promotes new installations of solar panels among neighbouring residential consumers. We make use of a panel dataset based on county level data for the years 2011-2016, aggregated to NUTS-3 regions. We employ a set of spatial econometrics models, i.e., Spatial Autoregressive Model, Spatial Error Model and Spatial Durbin Model, to provide insights on the role of peer effects in the diffusion of the technology, the mechanisms through which peer effects can occur and how household adoption of new technology is affected. In our results we find evidence that local authorities and local energy communities play an important role in spreading information and trust towards a new technology among households resident in the same region.