Can Public Housing Associations Drive the Diffusion of Energy Retrofitting Measures? The Case of PV Adoption

Abstract This study examines how public housing investments generate positive externalities by accelerating the adoption of energy retrofitting measures among neighboring private homeowners through peer influence. While peer effects, often driven by visibility or word of mouth, are well documented in driving photovoltaics (PV) system adoption among private-sector neighbors, their applicability requires careful consideration. In existing estimates, confounding cannot be ruled out, making it difficult to isolate causal effects. Addressing these gaps, our study leverages unique data in which pioneer PV system installation is determined exogenously, allowing us to tackle challenges related to omitted variable bias and endogeneity. Additionally, we explore how neighborhood characteristics shape the heterogeneity of these effects, addressing gaps in the literature on spatial variations in peer influence. Our findings show that public housing PV systems have a limited influence on homeowner adoption, with a stronger effect — up to a 1\% increase per additional PV system — observed in areas with low urban density and low existing market penetration rates. However, this passive peer influence alone is insufficient to achieve the necessary transition speed, highlighting the need for additional policy measures. Crucially, we provide a clean identification of peer influence exerted by PV systems, as Dutch public housing is visually indistinguishable from private housing due to policies promoting integration into the broader urban fabric. This policy context extends the implications beyond public housing policy, providing insight into how renewable energy technologies diffuse.