Clean Electricity, Dirty Electricity: The Effect on Local House Prices

Abstract

We study the external effects of large-scale conventional and renewable electric power generation facilities on local house prices. We compare coal, gas, biomass and wind power, combining information on all power plants and wind turbines in the Netherlands with house price data from 2.3 million housing transactions, covering a period of 30 years. Using a hedonic, difference-in-difference, and repeated sales model to explain price effects, we document negative external price effects for gas plants and wind turbines, but positive effects for biomass plants, conditionally upon an ex-ante lower priced location. These external effects of power generating facilities on local housing markets are important to consider, especially with the current focus of public policies on the expansion of renewable energy generation.

Keywords: Renewable energy, energy policy, externalities, wind power, coal plants, housing markets, residential real estate

JEL Classification: O13, Q42, Q43, Q51, R31, R52