Published on June 15th, 2011 | by Reggie Norris1
Solar Power Boosts the Sales Price of California Homes
A recent report by the Department of Energy Lawrence Berkeley National Lab (LBNL) provides the latest and greatest evidence that the addition of solar panels on homes increases the resale value of these homes.
The LBNL analyzed date from the sale of over 72,000 homes in 31 California counties from 2000 through mid-2009, approximately 2,000 of which had a solar power system at the time of sale. The research controlled for a large number of factors that could influence results, such as housing market fluctuations, neighborhood effects, the age of the home, and the size of the home and the parcel on which it was located.
According to the LBNL report, homes with solar power systems experienced an “average solar premium range from approximately $3.9 to $6.4 per installed watt (DC) among a large number of different model specifications, with most models coalescing near $5.5/watt. That value corresponds to a premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the study).” Furthermore, existing homes with solar power systems commanded a larger sales price premium than new homes with similarly sized solar systems. Critically, the research also shows the premium declines as PV systems age.
The report made clear that these results made sense in light of reasonable underlying assumptions. “The basis for making the claim that an installed PV system may produce higher residential selling prices is grounded in the theory that a reduction in the carrying cost of a home will translate, ceteris paribus, into the willingness of a buyer to pay more for that home. Underlying this notion is effectively a present value calculation of a stream of savings associated with the reduced electricity bills of PV homes, which can be capitalized into the value of the home.”
Furthermore, according to co-author and Staff Scientist Ryan Wiser of Berkeley Lab. “This research might influence the decisions of homeowners considering installing a PV system and of home buyers considering buying a home with PV already installed. Even new home builders that are contemplating PV as a component of their homes can benefit from this research.”
This report is well timed and good news in light of the dramatic increase solar adoptions in the U.S. including California. In calendar year 2010, approximately 880 megawatts of grid-connected solar energy systems were installed in the U.S. (of which approximately 30% were residential), up from 435 MW installed in 2009. Of this 880 megawatts in 2010, California solar leads the nation with 259 megawatts. California is also approaching 100,000 individual PV systems installed, more than 90 percent of which are residential.
Photo via KN6KS