N°23-100: Housing Price Externalities of Photovoltaic Systems: The Relevance of View

We study how photovoltaic (PV) systems externally affect the prices of owner-occupied houses and rents of residential dwellings. By creating a three-dimensional topographical model of our study areas in Switzerland, we model each building’s view at surrounding PV installations and merge this data with housing price observations. In the hedonic difference-in-differences regressions, we provide evidence of how this view (impaired or unimpaired) on a PV system is associated with lower residential rents. This effect is stronger for the view at multiple PV systems rather than at a single one, in situations where seeing is more likely, and where PV installations are disrupting a scenic view. However, price penalties are attenuated if rental dwellings have their own PV system or if neighboring properties have large PV systems which may benefit surrounding tenants in terms of electricity provision. Furthermore, by using municipal voting results on the Swiss Energy Act 2017 and the Swiss CO2 Act in 2021, we show how stated preferences for sustainability are driving the external effects of PV systems on rents. We document a similar causal pathway for lived preferences measured by the number and change in electric vehicles in Swiss municipalities. In contrast, we do not find a significant impact of view on prices for owner-occupied housing.