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Study Finds Midwest Utility-Scale Solar Projects Boost Nearby Property Values

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A study of utility-scale solar facilities built in the Midwest found that utility-scale solar projects increased nearby property values by roughly 0.5–2.0 %. 

“While the emissions and economic related benefits of deploying large-scale solar photovoltaics (PV) for electricity generation are well documented, relatively less is known about their impact on nearby property values,” the report’s authors said.

The paper, “Assessing property value impacts near utility-scale solar in the Midwestern United States,” investigates the location of utility-scale solar facilities in the U.S. Midwest, the average home value in each relevant zip code, and whether the presence of a utility-scale solar project affects nearby property values in any manner.

The study includes 70 utility-scale solar facilities built in the Midwest from 2009 to 2022 using data from the Lawrence Berkeley National Laboratory.

Alongside housing value data from Zillow (i.e., Zestimate), the study incorporates additional data, including solar project size in installed capacity, rurality, and state.

Using a difference-in-differences method, “our results indicate that utility-scale solar projects increase nearby property values by roughly 0.5–2.0 %,” the report’s authors said.

“Moreover, our results show that smaller projects have more of a positive impact on nearby property values than projects that are 20 megawatts or larger,” the report said.

The study said that understanding the property value impacts of utility-scale solar projects in the Midwest “not only helps stakeholders such as landowners and local officials better comprehend the overall costs and benefits of utility-scale solar projects, but it also generates ideas for potential policy change in the future, should they be achievable in complex regulatory environments.”

For instance, many counties in the Midwest still require utility-scale solar projects to be at least 500 feet away from the nearest property (i.e., the setback rule), and this has been one of the toughest obstacles for the development process, according to the study.

“As our study showed, the effect of utility-scale solar projects on nearby property values was actually positive in both rural and metro areas, and, thus, local officials could perhaps relax the regulations on how far these projects need to be away from nearest residence,” the report’s authors wrote.

In addition, as most studies have found that the magnitude of impact which utility-scale solar projects had on nearby property values were relatively small, and in our case were positive, local and state officials could create pathways for projects to get approved easier (e.g., with less impact studies required) in order to meet Renewable Portfolio Standards and other renewable energy and decarbonization goals as part of a broader energy roadmapping effort.

Study Limitations

There are some limitations to the study, its authors noted, both in the data collection process and methods.

For instance, using data from Zestimate and categorizing projects by zip code may be less accurate than using real transaction data and sight lines or radii for geographic bounds, the report noted.

"Nevertheless, the benefit of using Zestimate in this study was to ensure that there would be a value for every zip code at every month. Further, using zip codes for housing locations is less accurate than coordinates, and not every solar project is located directly in the center of each zip code area, impacting the accuracy."

Also, using binary variables in several places, "while easier to interpret, may not always be detailed enough, such as in how the property value impact of a 200 MW solar project may be very different than a project that is 20 MW."

Similarly, many suburban areas under the binary framework were considered as “Metro,” and less than one-third-of all projects were considered as “non-Metro.”

Ideas for Future Research

A few ideas for future research emerged from the study. "First, instead of using zip code as a unit, future studies could include a parameter for each project via GIS (such as miles or kilometers away), ensuring that a project is always at the center of the parameter, therefore increasing the accuracy of the results."

Also, to determine the property value impacts of utility-scale solar projects across the entire U.S., "studies could randomly select projects from each geographical region to generate results that are applicable to all projects," the study said.

"Moreover, while we have speculated that one of the reasons that we are seeing an increase in property values is from the new economic activity in these areas via tax revenues that are being fed into communities, future studies should attempt to move beyond correlations and attempt to pinpoint the exact driver(s) of 'why' property values are changing," the report's authors said.