Conceptualizing the Real and Perceived Risk Factors for Household Solar PV Investment on Energy Transition Agenda

The value of electricity produced via solar technologies has increased rapidly over the past decade. This brings along an enormous possibility to generate a substantial share of the world's energy demand, in tandem with pushing aggressive efforts to cut down carbon emissions. Distributed solar technology, such as the residential solar photovoltaic (PV) system has been acknowledged to be of significant potential. Nevertheless, realizing this potential will require overcoming economic and social barriers to get private individuals to invest in their households. As such, this paper aims to discuss the role of residential investors' real risk and perceived risk toward investors' acceptable level of investment return. The paper will focus on disentangling the real risk and perceived risk in estimating the risk premium that investors consider in the investment decision-making process. Considering this the authors suggest that the renewable energy policy framework should incorporate real risk valuation and perceptions from the perspective of the potential residential investors' strategic investment decisions regarding solar PV systems.