AIMS Energy, 2019, 7(2): 141-150. doi: 10.3934/energy.2019.2.141

Research article

Export file:


  • RIS(for EndNote,Reference Manager,ProCite)
  • BibTex
  • Text


  • Citation Only
  • Citation and Abstract

Do smart grid innovations affect real estate market values?

1 Department of Civil, Environmental and Architectural Engineering, University of Padova, Via Venezia 1, 35131, Padova, Italy
2 Department of Economics and Management, University of Padova, Via del Santo 33, 35123, Padova, Italy

To date photovoltaic energy systems have been widely installed on homes in Europe and all over the world. In Europe and in Italy investments in domestic photovoltaic power plants (PV) were boosted by generous feed-in tariffs that made these investments extremely attractive for small private investors, such as homeowners. It is commonly agreed that the greater the building energy efficiency, the greater the property market value. It is of paramount importance to determine the value that PV systems may add to home sale transactions. The aim of the paper is to investigate whether Smart Grids (SGs) innovation can increase market values due to higher production and consumption flexibility. SGs give de facto producers and consumers, the opportunity to be active in the energy market and strategically decide their optimal production/consumption pattern. In this paper, we provide a model based on the real option theory to determine the value of this flexibility and the related market value increase. We model the homeowner decision to invest in a solar home with a PV plant and connect to an SG by comparison to the decision to invest in a solar home not connected to an SG. We determine the property potential market value increase due to the opportunity to perform active energy management given by smart grids and we compare this value increase to the PV plant value per se. To capture the value of managerial flexibility we implement a real option approach. Results of simulations, performed according to zonal prices’ trend and volatility in the North and South of Italy, show that in the North and in the South, being connected to an SG increases by about 5-10% the PV investment’s value and this quota increases as energy savings and flexibility increase. The greater the flexibility, the greater the property market value.
  Article Metrics


1. D'Alpaos C, Bragolusi P (2018) Buildings energy retrofit valuation approaches: State of the art and future perspectives. Valori e Valutazioni 20: 79–94.

2. D'Alpaos C, Bragolusi P (2018) Multicriteria prioritization of policy instruments in buildings energy retrofit. Valori e Valutazioni 21: 15–25.

3. Barbose G, Darghouth N, Weaver S, et al. (2015) Tracking the Sun VII: An historical summary of the installed price of photovoltaics in the United States from 1998 to 2014. Lawrence Berkeley National Laboratory, Berkeley, CA. Available from:

4. Hoen B, Wiser R, Adomatis S, et al. (2015) Selling into the sun: Price premium analysis of a Multi-State Dataset of solar homes. Lawrence Berkeley National Laboratory. Available from

5. Dasrupt SR, Zivin JG, Costa DL, et al. (2012) Understanding the Solar Home price premium: Electricity generation and 'Green' social status'. Eur Econ Rev 56: 961–973.    

6. Farhar B, Coburn T (2008) A new market paradigm for zero-energy homes: A comparative case study. Environ: Sci Policy Sustainable Dev 50: 18–32.

7. Hoen B, Cappers P, Wiser R, et al. (2013) Residential photovoltaic energy systems in California: The effect on home sales prices. Contemp Econ Policy 31: 708–718.    

8. Desmarais L (2013) The impact of photovoltaic systems on market value and marketability: A case study of 30 single‐Family homes in the north and northwest Denver metro area. Available from:

9. Bertolini M, D'Alpaos C, Moretto M (2018) Do Smart Grids boost investments in domestic PV plants? Evidence from the Italian electricity market. Energy 49: 890–902.

10. Biondi T, Moretto M (2015) Solar Grid Parity dynamics in Italy: A real option approach. Energy 80: 293–302.    

11. Bertolini M, D'Alpaos C, Moretto M (2018) Electricity prices in Italy: Data registered during photovoltaic activity interval. Data Brief 19: 1428–1431.    

12. Canesi R, D'Alpaos C, Marella G (2016) Foreclosed homes market in Italy: Bases of value. Int J Hous Sci Its Appl 40: 201–209.

13. Canesi R, D'Alpaos C, Marella G (2016) Forced sale values vs. Market values in Italy. J R Estate Lit 24: 377–401.

14. Antoniucci V, D'Alpaos C, Marella G (2015) Energy saving in tall buildings: From urban planning regulation to smart grid building solutions. Int J Hous Sci Its Appl 39: 101–110.

15. Eurostat (2015). Data available from:

16. Gianfreda A, Grossi L (2010), Forecasting Italian electricity zonal prices with exogenous variables. Energy Econ 34: 2228–2239.

17. Gestore Mercati Energetici (GME) (2018) Available from:

18. Fernandez P, Aguirreamalloa J, Corres L (2011) Market risk premium used in 56 countries in 2011: a survey with 6,014 answers. IESE Working Paper n. 920.

19. Fernandez P, Aguirreamalloa J, L. Corres L (2013) Market Risk Premiun used in 82 countries in 2012: a survey with 7,192 answers. IESE Working Paper n. 1059-E.

20. Dipartimento del Tesoro (2015). Available from:

21. Ciabattoni L, Grisostomi M, Ippoliti G, et al. (2014) Fuzzy logic home energy consumption modeling for residential photovoltaic plant sizing in the new Italian scenario. Energy 74: 359–367.    

22. Kost C, Mayer JN, Thomsen J, et al. (2013) Levilized cost of electricity renewable energy technologies. Fraunhofer ISE.

23. Kastel P, Gilroy-Scott B (2015) Economics of pooling small local electricity prosumers-LCOE & self-consumption. Renewable Sustainable Energy Rev 51: 718–729.    

24. Reichelstein S, Sahoo A (2015) Time of day pricing and the levelized cost of intermittent power generation. Energy Econ 48: 97–108.    

25. Huld T, Müller R, Gambardella A (2012) A new solar radiation database for estimating PV performance in Europe and Africa. Sol Energy 86: 1803–1815.    

26. Bignucolo F, Coppo M, Crugnola G, et al. (2017) Application of a simplified thermal-electric model of a sodium-nickel chloride battery energy storage system to a real case residential prosumer. Energies 10: 1497.    

© 2019 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution Licese (

Download full text in PDF

Export Citation

Article outline

Show full outline
Copyright © AIMS Press All Rights Reserved