A very common question is ‘Does solar increase my home value?’. Prior studies have stated that having solar panels on a home have no benefits in increasing the value of a home, but there have been many restrictions on the studies themselves. Just recently, a study done by Berkeley Labs with newer demographics and information, their studies indicate that solar does increase the value of a home while seeing solar benefits.
The study findings included:
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Having a solar system on top of a home adds a unique value financially, environmentally, and stylistically.
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Appraisers will be able to apply the systems value onto the home itself.
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Each system varies in price addition, based on the KW size.
According to Berkeley Labs, “In partnership with universities and appraisers, studies have found that solar unequivocally improves the value of a home, on average by an amount of $15,000.” (revisionenergy.com) Along with that, they stated, “Almost 22,000 sales of homes, almost 4,000 of which contained PV systems in eight states from 2002 to 2013—producing the most authoritative estimates to date of price premiums for U.S. homes with PV systems.”
The SEIA (Solar Energy Industry Association) suggests also using one of the following 3 methodologies to calculate the added value of solar.
The Income Approach
The Income Approach takes the expected energy cost savings minus the ongoing operating costs. This is often referred to as the avoided cost which is the billing rate of the utility. Advantage – this is the rationale that drives most solar purchase decisions.
The Cost Approach
The Cost Approach represents the current cost to replace the solar system. This reflects current pricing of a system, but solar systems depreciate over time, so that must be taken into account. Since solar prices have fallen over the years, you do not want to pay more than a new system costs. And incentives often affect the cost approach. In other words, buyers are willing to pay replacement cost AFTER incentives. In 2010, residential pricing was $6.75/ Watt. In 2016, closer to 3.25/Watt. The cost approach takes into account the age and quality of the installation.
The Comparable Sales Approach
The Comparable Sales Approach is when comparable properties in a geographic area are matched against each other – one with solar and the other without solar. This is a common appraisal method for real property and the more solar that is installed the better this method should work. However, in many areas, there may not be enough installations yet for this to work well. And then there is always location, location, location. It may be hard to factor out other contributing factors to value variation when doing property comparisons.
As solar energy becomes mandated across the nation, home value that have solar will continue to increase as the nation adapts to this new norm.
If you’re interested in seeing how much you can save with solar, visit our Home page to see more information.
Sources:
https://emp.lbl.gov/publications/selling-sun-price-premium-analysis