The Value of Transparency in Distributed Solar PV Markets
NREL research analyzes data from a U.S. quote aggregator to study the effects of transparency on distributed solar photovoltaic (PV) markets. The study shows lower prices in more transparent markets and suggests measures to increase access to quotes may help reduce prices.
Market transparency refers to the degree of customer awareness of product options and fair market prices for a given good. In The Value of Transparency in Distributed Solar PV Markets, NREL uses residential solar PV quote data to study the value of transparency in distributed solar PV markets. The researchers find that improved market transparency results in lower installation offer prices. Further, the results of this study suggest that PV customers benefit from gaining access to more PV quotes.
Prospective PV customers generally make an adoption decision based on a small number of installation quotes. As a result, PV markets are relatively non-transparent; customers are largely unaware of market prices and may not obtain the lowest available price. PV customers that use quote aggregators—third-party companies that collect quotes on behalf of customers—receive more quotes, on average, than customers that solicit quotes directly from installers. Hence, quote aggregation may be one means of improving PV market transparency. If so, what is the value of this market transparency? How would market transparency affect installer behavior and PV customer outcomes?
Data and Methods
In the study, NREL uses data from more than 70,000 residential PV quotes provided by the quote aggregator EnergySage to study the value of market transparency. First, prices are compared for quotes made through the quote aggregator with prices for quotes made directly to the same customers. Second, a linear regression is used to test how installers respond to the number of quotes received by customers.
From the data, NREL finds that:
- Quote aggregation drives installers to offer lower prices.
- PV installers bid $0.24 per watt lower on the aggregator’s quote platform than when they bid directly to the same customers, on average.
- Prices decline as customers receive more quotes because of increased installer competition.
This research is supported by the U.S. Department of Energy Solar Energy Technologies Office.