Impact of large-scale solar on property values in the United States: Diverse effects and causal mechanisms

Abstract

As the renewable energy transition continues into less receptive communities, local opposition is expected to intensify, potentially slowing the process. Since the local impacts are neither well quantified nor widely recognized, we lack policies and common practices to mitigate the potential associated welfare loss in affected communities. Based on a nationwide dataset combining property transactions and large-scale solar photovoltaic (LSSPV) sites, we analyze the heterogeneous effects of LSSPV on property prices and the associated causal pathways. Difference-in-differences estimates show that LSSPV significantly increases agricultural or vacant land value by about 19.4% within a 2-mile radius, while simultaneously reducing residential property values within 3 miles by about 4.8%. The estimated average negative impact on home values is primarily driven by site proximity and diminishes with both distance and time. Effect estimates are more robust to alternative specifications when proximity pairs with visibility rather than invisibility, but no evidence suggests visibility significantly amplifies the proximity effect. Heterogeneous effect estimates indicate that high solar lease potential, being in heavily Democratic-leaning counties, and brownfield redevelopment largely mitigate the negative residential value impact. The analysis reveals no significant heterogeneity across a few factors, including varying site visibility, directional orientation of properties relative to the LSSPV site, and different tracking systems. Evidence indicates that the negative impact on residential values might mainly stem from negative perceptions, but channels through physical conditions cannot be entirely dismissed. Our assessment provides benchmark information for local externality mitigation plans, potentially reducing community opposition and expediting the renewable energy transition.