Too close to the sun: solar farms’ impact on housing prices at subtropical latitudes

Abstract

ABSTRACT While the transition from fossil fuels to renewable energy will benefit many constituencies, recent work suggests that newly activated solar panels may negatively impact nearby housing prices. Although a single mechanism driving these effects has not been causally identified, alternative explanations posit that homes near solar farms lose value either due to glare or the loss of open space amenities and associated rural character. We supplement this literature with an analysis distinguished by a unique sample with the most equatorial location to date and the largest average solar farm (26 MW), allowing for a careful investigation of the role of size and glare in the capitalization of solar farm proximity. Using hedonic analysis, manually traced solar farm footprints, and difference-in-differences identification, we find a 6.86% negative capitalization of solar farm proximity that does not appear to be attributable to glare and is driven by the impacts of very large solar farms. The results are robust to concerns of negative weights associated with bad controls. To limit economic losses associated with the renewable energy transition, solar farms should be strategically located to minimize the number of nearby homes regardless of whether glare is likely to be a concern.