What makes solar power contagious?

Two marketing professors test the effects of social influences on the adoption of solar power.

Some of the best strategies for increasing the adoption rates of solar panels may be social. And it starts with what you see in your neighborhood.

When Bryan Bollinger and Kenneth Gillingham were working toward their doctoral degrees at Stanford Business School, they did a ten-year study of clusters of solar installations in California.

Their paper, “Peer Effects in the Diffusion of Solar Photovoltaic Panels,” showed that 10 extra solar installations in a zip code increased the probability of someone else in the area adopting solar power by 7.8 percent.

Even more dramatic, they found that a 10 percent increase in the number of people with solar panels in a zip code led to a 54 percent increase in solar panel adoption in the same zip code.

“These results provide clear evidence of a statistically and economically significant effect,” says Bollinger, now an assistant professor of marketing at New York University’s Stern School of Business.

Basically, seeing the panels and hearing neighbors talk about them led others to install solar systems of their own.

“If my neighbor installs a solar panel and tells me he’s saving money and he’s really excited about it, it’s likely I’ll go ahead and do the same thing,” says Gillingham, an assistant professor of economics at Yale University.

“Then there are others who’ll install because they don’t want to be one-upped by their neighbors.”

Supporting this finding, Shelton Group analysts know from their work in the industry that solar panel owners love to brag about their systems, dragging friends to their meter to show it running backwards.

“Now, if we could only get people to do the same thing for their new HVAC units,” says Shelton Vice President of Research and Insights Lee Ann Head.

Which social tools work best?

Based on their study, Bollinger and Gillingham won a $2 million grant from the Department of Energy as part of the SEEDS (Solar Energy Evolution and Diffusion Studies) program to test the social interactions in pilot towns in Connecticut that lead homeowners to adopt solar.

“We will build on what we did in California,” says Bollinger. “In that study we could conclude that there was a positive social influence in the adoption of solar, but we weren’t able to say a lot about the mechanism of influence.

“Was it the visibility of solar panels? Was it word-of-mouth communication?

“In conjunction with Solarize Connecticut, SmartPower and the Connecticut Clean Energy Finance and Investment Authority, we are creating pilot programs to see which tools are the most effective. And we’ll do extra research to get at the mechanism: What’s the interaction that leads to adopting solar power?”

The tools include:

• Solar ambassadors, who host small party-style gatherings where they provide information about solar power
• Group pricing, sometimes sponsored by the town
• Town contractor selection, in which the Connecticut Clean Energy Finance and Investment Authority invites contractors to give presentations and the towns get to choose the contractors they want to use
• Solar power companies’ websites
• Local websites that post information about solar power
• Social media sites such as Facebook and Twitter, where homeowners talk about their solar projects

“We’ll look at all these tools,” says Bollinger. “We’ll study how they interact and why.”

To measure which methods have the most impact, Bollinger and Gillingham will vary which ones are used in pilot towns.

“In one town, we’ll throw out the group pricing,” says Bollinger. “In another, we’ll throw out the solar ambassadors. Then we’ll compare the results with control towns.”

The SEEDS program is part of DOE’s SunShot Initiative to make solar energy cost competitive with other forms of energy by 2020.