Department of Economics

In this paper, I investigate the effects of the U.S. federally implemented Solar Investment Tax

Credit (ITC) on states’ solar energy installation and utilization. In particular, I compare relative

trends in solar installation and utilization between states with initially higher levels of solar and

states with initially lower levels of solar, before and after the implementation of the Solar ITC.

My findings demonstrate that states with initially higher levels of solar prior to 2006 — the year

the Solar ITC took effect — experienced rapid, significant growth in solar installation and

utilization relative to states with initially lower levels of solar, on average. These results suggest

that the Solar ITC had a larger effect on solar installation and utilization in states with initially

higher levels of solar compared to states with initially lower levels of solar, on average.