Essays on the economics of solar power

The first chapter of this dissertation estimates subsidy pass-through in residential solar markets. Pass-through is estimated using data from the California Solar Initiative, a large scale rebate program where residential customers are given cash rebates for installing solar photovoltaics. Exploiting the tiered structure of the rebates across the utilities allow an estimation of subsidy pass-through. About 45% of every dollar of subsidies is estimated to be captured by solar owners. Subsetting this estimate into household owned solar PV systems versus third party owners reveals that very little of the subsidy is captured by consumers of household owned systems. Furthermore, pass-through varies by zip code income. Zip codes in the highest quartile of income account for a large fraction of residential photovoltaic installations. However, zip codes in the lowest quartile of median household income have a subsidy pass-through rate slightly higher than the upper quartile.;The second chapter provides a simple framework for understanding the distributional impacts of a decline in price of residential solar power. In the model, there is a regulated utility that prices at an average cost greater than marginal cost to recover the large fixed costs of servicing its residential consumers. In equilibrium, high income consumers are more likely to install solar power. A subsidy or price decline in solar power encourages more consumers to install solar, benefiting individuals who install solar, but at a cost. More consumers installing solar power shifts the large fixed costs of the electric grid onto the remaining electric consumers. Therefore solar subsidies or a price decline has the unintended consequence of making consumers who do not install solar worse off through increased electricity prices.