The Impact of Solar Farms on Property Values
Solar farms are often celebrated as a key solution to the global climate crisis, offering clean energy and reducing reliance on fossil fuels. However, a recent study from Virginia Tech has uncovered a complex reality: while these large-scale solar projects may benefit certain landowners, they can negatively affect property values for nearby homeowners.
The research analyzed 8.8 million real estate transactions near 3,699 utility-scale solar facilities across the United States. These are not the small rooftop panels found on individual homes but massive installations covering hundreds of acres. The findings reveal that homes located within three miles of such a facility experience an average 5% drop in value shortly after construction. This decline is consistent regardless of whether the solar farm is visible from the home, indicating that proximity alone is the primary factor.
Despite this negative impact on residential properties, agricultural and vacant land within two miles of a solar plant saw a significant increase in value—nearly 19%. This surge is attributed to the growing demand for land suitable for future solar expansion. Developers prefer to lease land adjacent to existing infrastructure, making farmland near solar sites highly attractive. However, this trend could lead to higher rents for tenant farmers, even as landowners benefit financially.
The study also noted that the depreciation in home values typically rebounds within a decade. However, for homeowners looking to sell quickly after a solar farm is built, the short-term financial hit can be severe. Interestingly, homes on larger lots—more than five acres—were largely unaffected by the price drop. This suggests that property size and location play a crucial role in determining the impact of nearby solar facilities.
Regional Variations and Policy Implications
While the study covers the entire United States, the debate over where to build solar farms is particularly intense in rural Virginia. The state has set ambitious goals to transition to carbon-free energy, with Dominion Energy and Appalachian Power mandated to achieve this by 2045 and 2050, respectively. This push has led to increased development of solar projects, sparking concerns among local residents about the balance between environmental goals and personal financial loss.
The research team, led by Zhenshan Chen, an assistant professor of agricultural and applied economics at Virginia Tech, emphasized that the results vary depending on regional conditions and specific circumstances. Nonetheless, a clear trend emerged: solar farms do influence nearby property values.
Chen urged policymakers to consider directing future solar development toward brownfields—previously developed, abandoned industrial land—rather than prime farmland. While the Environmental Protection Agency (EPA) offers financial assistance for cleanup, many brownfield sites remain too costly for developers to pursue.
Contradictory Findings in the Field
The Virginia Tech findings align with a broader and sometimes conflicting body of research on the relationship between solar farms and real estate. For instance, a Loyola University study last year found that homes near solar plants in the Midwest actually saw a slight increase in value—between 0.5 and 2 percent. In contrast, a 2023 analysis by the Lawrence Berkeley National Lab and the University of Connecticut revealed that homes in six states lost 1.5% of their value when located near large solar sites.
Another study from Virginia Commonwealth University highlighted the extent of solar development in the state, noting that more than 30,000 acres of land are now occupied by utility-scale solar projects. Cropland has been disproportionately affected, despite making up only 5% of Virginia’s total land. It accounts for 28% of land used for solar, raising concerns about the potential displacement of farmers as demand for solar space grows.
Forests, on the other hand, have been impacted more proportionally. Around 50% of solar sites were built on previously wooded land, reflecting the state’s overall forest coverage.
Balancing Growth and Local Concerns
As the solar boom continues across the U.S., the message is clear: while these projects play a vital role in combating climate change, they are also reshaping the housing market and land use patterns. Homeowners, farmers, and policymakers must navigate the complex trade-offs between environmental progress and economic impacts.
The challenge lies in finding a sustainable path forward—one that supports renewable energy goals without compromising the livelihoods of those living in the shadow of these green energy initiatives.
