Factors influencing household solar panel investments in Hungary and abroad

Abstract

This study aims to examine factors that influence green investments, particularly solar panel investments of households. This may be interesting from the perspective of policy interventions in individual decision-making (see nudging), while it can also provide a good basis for further domestic empirical studies exploring the drivers of spatial location of household solar panel installation. In the first part of the study, we examine factors that influence green, primarily solar investment decisions of households based on the literature. Our review suggests that in addition to economic rationality (e.g. costs and benefits), socio-demographic factors (e.g. net income, level of education, age), housing circumstances (e.g. family house, countryside) and behavioural or attitude factors (e.g. environmental consciousness, imitation effects, prestige) also affect individuals’ investment decision. The second part of our paper presents the structure of residential energy use in Hungary, which can significantly limit solar investments of the population. Our research indicates that it is not only the type of residential buildings (family house, condominium) but also infrastructural conditions that determine domestic energy consumption and influence the spread of household solar panels. Finally, the spatial location of domestic household-sized solar panels are investigated.

Our empirical research shows that the income available in each settlement significantly influences the number and capacity of household-sized solar panels. Solar panels are concentrated in regions with higher average income level, namely around the lake Balaton, the capital city of Budapest, in the agglomerations of Pécs, the largest city of the Southern Transdanubian region and in the Western Transdanubian region. In addition, a so-called “small settlement effect” can be also observed, as some villages outside those regions are listed at the top of the ranking. This is in line with observations from international studies (see the so-called “peer” or imitation effects), which suggest that this is presumably due to the influence of a local innovator or solar market player. It can be the subject of further research to investigate how factors beyond economic rationality identified in international studies affect household solar investments in Hungary. This could also justify the introduction of “soft” policy measures (e. g. nudging tools, awareness-raising campaigns) to achieve the ambitious goal of the Government to triple the number of household sized solar panels until 2030.