Abstract

This paper investigates the causal impact of renewable energy subsidies on the deployment of solar photovoltaic (PV) systems in Italy, using the Fourth “Conto Energia” as a case study. While Italy’s feed-in tariff scheme played a pivotal role in accelerating PV diffusion, questions remain regarding its effectiveness under fiscally constrained designs. Drawing on regional data from 2008 to 2013, we implement a Difference-in-Differences (DiD) approach that exploits heterogeneity in regional uptake intensity. Although the policy was implemented nationwide, substantial differences in responsiveness enable a quasiexperimental identification strategy. Diagnostic tests reveal violations of the parallel trends assumption, which we address using an extended DiD model with region-specific linear trends. This correction reduces bias and yields a more credible estimate of the policy’s impact, which remains positive and statistically significant. Our findings confirm the effectiveness of calibrated subsidies even under declining tariffs, especially when paired with institutional credibility and local readiness. The study also highlights the value of rigorous ex-post evaluation in improving the equity and efficiency of clean energy policies.

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