Using the Spatial Distribution of Installers to Define Solar Photovoltaic Markets

A growing body of research seeks to explore the effects of solar photovoltaic (PV) market dynamics on competition and ultimately on prices. Researchers have found significant associations between installed system prices and PV industry concentration, numbers of installers, and installer size and experience. However, the use of jurisdictional boundaries (e.g., zip code, county, state) as proxies for market boundaries may misrepresent the true market structure and limit understanding of solar PV market competition, firm relationships, and price trends.

This paper develops an approach to delineate solar PV market boundaries based on the spatial distribution of installer firms. The basic premise of the approach is that the extent to which different installer firms exert price constraints on one another may be inferred from their spatial distributions. We develop an algorithm based on an installer overlap coefficient (IOC) that calculates the percentage of installers that are shared between multiple geographic areas. The IOC algorithm allows us to delineate solar PV market boundaries around clusters of local installer communities.