The Uruguayan government decided, in 2010, to encourage the installation of solar panels by households and firms. Specifically, the government initiated a net-metering policy, agents with solar panels can now take or overturn electricity to the grid. We study the environmental and economic consequences of this policy. We collect a novel dataset on electricity demand and overturn to the grid at a household/firm level for the whole country. Using an event study approach, we find that solar panels decrease the electricity demand from the grid. The decrease is substantial; on average, agents decrease their electricity demand by 15%. We also discuss if the program’s affect on CO2 emissions and its cost.
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