Photovoltaic (PV) energy offers the technical potential for substantially reducing greenhouse gas (GHG) emissions when it is substituted for fossil fuels (Zhai et al., 2012; Drury, Denholm, and Margolis, 2009). Its rapidly decreasing cost (Barbose and Darghouth, 2015; Bazilian et al., 2013, Wirth, 2016) makes widespread adoption of PV a highly attractive global policy objective. For countries dependent on fuel imports, domestic energy production also offers significant benefits in terms of balance of payments and national security. As the various societal and environmental benefits of PV have become increasingly clear, several governments have offered substantial incentives to make PV adoption financially attractive and thus help achieve these benefits more rapidly (Kumar, 2015). PV is different from conventional energy technologies in at least two fundamental ways that are relevant to its adoption: the geographic distribution of the resources and the relative lack of economies of scale in production. Unlike fossil and nuclear fuels, the resource (sunlight) is widely distributed geographically, and the economic viability of small-scale PV production units comes closer to that of large-scale ones than is the case for many other energy technologies. These two characteristics make PV technically and economically attractive to small-scale entities such as communities and households in ways that most other energy production systems are not. The choice to adopt PV technology is also fundamentally different from other technological choices, particularly from the viewpoints of households. For example, energy production is an unfamiliar form of economic activity for most households in high-income countries. Consequently, adopting a PV system is not like acquiring typical household technologies: it has attributes both of a consumer durable and of an investment. The decision process for adopting PV may therefore be different from what would be expected by analyzing it with concepts developed for understanding investments or consumer purchases. In this chapter, we examine available evidence on PV adoption by households, primarily from Germany and the United States, two countries where large financial incentives have been offered, to attempt to understand rates of adoption and their determinants. Our purposes are twofold: to better inform policies aimed at increasing PV adoption; and to contribute to the understanding of a form of economic behavior that is quite different from the usual household economic activities of outside employment, consumption, and investment in financial instruments.

Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Renewable Energy
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Renewable Energy
Lower technology costs and supportive public policies are driving an increase in renewable energy in markets around the world. EPIC research is assessing the costs, benefits, and efficiency of policies...