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Solar Systems:
Decision making factors influencing adoption by private roof-owners

Dr. Sharon Soroker
Tel Hai College

Renewables, green sources of energy, are today less expensive than ever due to technological progress and cost reduction (mainly because of mass production and low cost of the key material - Silicon). The average cost of producing 1 kWh (kilowatt hour) of electricity using photovoltaic technology has dropped more than 85% within a decade, with the common estimation that the prices will continue to decline in the next decade.

In Israel, as in many other countries, rooftop solar systems are crucial for gaining a distributed energy market, based on renewables, with advantages for the transmission network (Moep report, 2020). Although installing a solar system produces an impressive return on investment for private homeowners or any rooftop owner for this matter (repayment in 6-10 years with guaranteed rate by the government for 25 years, IRR = 10% to 15% with various funding options offering an amazing ROE rates), the installation ratio is a fraction of the total potential, even in an economic environment of negligible real interest rates and plenty of finance solutions. This case study aims to rase the question on this apparently non rational behavior of private rooftop owners avoiding or delaying the installation of solar systems.

Using insights and methodologies from behavioral economics and social psychology, this case study examines practical ways for encouraging massive solar installation, which is expected to create substantial economic, environmental, and social benefits.

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