The impact of subsidies of residential sector electricity to photovoltaic technologies adoption

Abstract

The Federal Electricity Commission has the responsibility, as the only firm in charge of the distribution of electricity, to improve the investment needed to reach the energy transition’s goals in favor of clean sources. The Mexican government has developed a group of program and founds intending to boots and individual’s installation of self-generators of energy, such as solar panels in houses. The main objective of this paper is to show, using Special Regression estimator taken from Dong and Lawbel (2015), that high levels of subsidies that the government spends in electricity, decrease the incentives of households to invest in solar panels. This research presents how the effect of subsidies is adverse to the propensity to install solar panels; it proves that the government is not allowing households to take part in the energy transition.