Griffith Asia Insights
Panels to power: Investigating the solar rebound effect in Vietnam
LUAN NGUYEN, SHYAMA RATNASIRI, LIAM WAGNER, DAN NGUYEN AND NICHOLAS ROHDE |
Solar energy has emerged as a beacon of hope in the fight against climate change, offering a sustainable and low-carbon alternative to traditional fossil fuels. In recent years, the adoption of residential rooftop solar panels has gained significant momentum, driven by both environmental concerns and economic incentives. However, as the solar revolution unfolds, questions arise about its actual impact on household energy consumption patterns and its effectiveness in reducing carbon emissions. Addressing these concerns requires a nuanced understanding of solar rebound effects’ short- and long-term dynamics.
Our recent study explored the complexities of solar rebound effects, focusing on residential rooftop solar installations in Vietnam. Against the backdrop of escalating climate change impacts and the urgent need for climate-resilient energy solutions, the study explored the intricate interplay between solar adoption, energy consumption behaviour, and environmental outcomes.
The study leverages a comprehensive panel dataset encompassing approximately 3500 households in Hanoi, Vietnam, offering a rich tapestry of insights into energy consumption dynamics. Employing a rigorous difference-in-differences identification strategy, the research assesses the impact of solar installation on household energy consumption, shedding light on both the immediate and long-term effects of rooftop solar adoption.
At first glance, the findings paint a complex picture of solar rebound effects. Upon installing solar panels, households exhibit a commendable reduction in grid electricity consumption by approximately 3.6 per cent, signalling a promising shift towards low-carbon energy sources. However, this reduction is concomitant with a surprising increase in total energy consumption by around 16 per cent, indicative of a substantial rebound effect stemming from solar installations.
The implications of these findings are profound, challenging conventional wisdom about the environmental benefits of rooftop solar. While solar panels offer a pathway to reduce reliance on carbon-intensive grid electricity, the observed rebound effect underscores the need for a more nuanced understanding of energy consumption behaviour post-solar installation. The study suggests the perception of “free electricity” associated with solar energy may contribute to increased energy consumption among solar adopters.
Moreover, the research unveils the temporal dynamics of solar rebound effects, offering insights into how energy consumption patterns evolve. Within one year of solar installation, the decline in grid usage levels off to 1.5 per cent, while the rebound effect stabilises at 3.5 per cent, suggesting a partial reversion in behaviour towards increased dependency on the grid. These trends highlights the importance of considering both short and long-term dynamics in assessing the effectiveness of rooftop solar in mitigating carbon-intensive energy usage.
Beyond the immediate implications for energy consumption behaviour, the study delves into the broader context of renewable energy adoption in developing countries like Vietnam. Recognising the unique socio-economic and policy landscapes that shape energy transitions, the research offers valuable insights for policymakers, energy practitioners, and researchers striving to promote sustainable energy transitions.
In conclusion, while rooftop solar holds immense promise as a climate-resilient energy solution, grappling with rebound effects is paramount to unlocking its full environmental potential. By unravelling the complexities of solar rebound effects and their temporal dynamics, the study provides a roadmap for fostering sustainable energy transitions in the face the clallanges of climate change.
Armed with these insights, policymakers can develop targeted interventions to maximise the environmental benefits of rooftop solar and accelerate the transition towards a sustainable energy future.
Luan Nguyen (Department of Accounting Finance and Economics, Griffith Business School) Associate Professor Shyama Ratnasiri (Griffith Asia Institute), Associate Professor Liam Wagner (Curtin University), Dan The Nguyen (Hanoi Power Corporation, Vietnam) and Associate Professor Nicholas Rohde (Department of Accounting Finance and Economics, Griffith Business School)
This article is a synopsis of the full journal article:
Luan Thanh Nguyen, Shyama Ratnasiri, Liam Wagner, Dan The Nguyen, Nicholas Rohde, Solar rebound effects: Short and long term dynamics, Renewable Energy, Vol 223, 2024, https://doi.org/10.1016/j.renene.2024.120051.
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