Research_Solar Farms Can Brighten Agricultural Land Values

Municipalities have shunned solar farms because these large installations are believed to reduce property values. Now, in a first-of-its-kind study, Georgia Tech economist Laura Taylor shows that utility-scale solar farms don’t adversely affect sales prices for agricultural land. 

The work, published recently in the journal Land Economics, may help inform local decision-making. “As zoning boards are weighing the pros and cons of solar development in their communities, they should be aware of this evidence,” Taylor said. “There are many considerations, but when folks suggest this is going to ruin agricultural land values, our evidence suggests that’s likely not true.” 

In the past decade, solar-generated electricity increased a hundredfold, from 1.2 billion to 114.7 billion kilowatt hours in the United States, a trend that’s likely to continue as the need for renewables grows.  

Utility-scale solar farms that power thousands of homes could use 30 acres or more of rural land that might otherwise be used for agriculture, seeding conflict between agricultural communities and solar developers.  

Using a Zillow Research database of agricultural land sales, Taylor and former Georgia Tech postdoctoral fellow Nino Abashidze, now an assistant professor at the University of Wyoming, looked at data from 451 North Carolina solar farms, evaluating agricultural sale prices and land characteristics within 10 miles of the farm. 

According to the U.S. Energy Information Administration, North Carolina ranked third in the nation in 2022 in overall installed solar capacity. Solar energy capacity in the state grew exponentially in the decade after 2009, partly in response to financial incentives and the state’s mandate that utilities produce 12.5% of their electricity from renewable energy sources by 2021.  

North Carolina landowners were able to secure 20-year leases for solar development at $500 per acre or more, while average lease rates for agricultural production are often less than $100 per acre.  

But by 2020, seven North Carolina counties had instituted moratoriums on solar development. One township banned solar farms. 

“There’s a perception that being adjacent to a solar farm hurts agricultural land value, but this study shows that that’s not the case,” said Taylor, chair of the Georgia Tech School of Economics  and interim director of the Energy, Policy, and Innovation Center. What’s more, being close to a transmission line after solar development has occurred nearby can actually increase agricultural land values. 

With new renewable power sources comes the need for new transmission lines, which can be challenging to site. “What we found surprising is that being within a mile or two of a transmission line increased agricultural land sales prices 4% on average if there was solar development also in the area,” she said.   

Because lease rates for solar farming are often higher than those for crop production, the pressure to convert agricultural land will continue in North Carolina and elsewhere. And, likely, so will conflict. Taylor hopes that “strong empirical evidence that solar farms do not negatively affect neighboring agricultural land values, and indeed can have some positive spillover effects when nearby land is also very close to transmission infrastructure” will help residents and officials make informed decisions. 

Taylor was intrigued by the results indicating transmission lines’ long-term positive effect on property values. She is optimistic that some landowners can potentially benefit from transmission deployment. “The notion that we can couple power generation and landowner benefits with transmission line siting presents an interesting opportunity in a shifting landscape.” 

In the future, she envisions digging into how transmission planning and solar siting could be considered simultaneously, something that has not traditionally happened in the past.  “Using a common framework to explore these opportunities in the future could help us better understand the potential synergies in land value, clean energy, and affordable inter-connection.”