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Published on December 17th, 2013 | by Silvio Marcacci


Study Shows Rooftop Solar Adds Thousands To Home Resale Values

December 17th, 2013 by  

Installing rooftop solar panels boosts a home’s resiliency and green credentials while cutting utility bills, but does it also increase a home’s resale value?

The answer according to Exploring California PV Home Premiums, a new Lawrence Berkeley National Laboratory (LBNL) study, is a resounding yes – at least in California.

Data analyzed from 2000-2009 highlights a clear trend of solar homes selling for a higher premium than non-solar homes statewide, meaning going green also creates economic opportunity and empowers homeowners to make some greenbacks.

Rooftop Solar Values Undefined And Underestimated

Fast on the heels of America’s record-setting third quarter for new residential solar installations, the LBNL study fills a major gap in adequately valuing home solar systems.

While several previous studies (including a 2011 LBNL report) recognized solar homes command higher prices, many appraisers assign no additional value to a solar PV system. And, those who do assign value have little data in terms of comparable home sales to determine the exact value to assign to the home. Considering sales of green goods have outpaced the overall economy and clean energy investments have been shown to significantly boost commercial building values, it’s a timely quandary.

LNBL decided to solve this problem by examining sales data for 1,894 solar homes and 70,425 comparable non-solar homes sold across California between 2000-2009. Analysts took three factors into consideration: regression analysis of actual sale prices over time, sensitivities of estimated solar premiums to the system age and size, and comparison of actual solar premiums paid compared to predictions made through estimated system cost and income.

$5,900 Resale Value Increase Per Installed Kilowatt

Their results are as clear as the sun on a cloudless day. LBNL’s report estimated that each 1-kilowatt (kW) increase in rooftop solar system size adds $5,911 to a home’s resale value. “Our analysis offers clear support that a premium exists in the marketplace, thus PV systems have value and their contribution to home values must be assessed,” states the report.

California solar home resale premiums

California solar home resale premiums chart via Lawrence Berkeley National Laboratory

However, consumer misperceptions about a rooftop solar array’s age diminishing its output and value often hang over solar homes. The report found that for each year of a system’s age, solar premiums decline 9% – falling much faster than either system income (which decreases .5% annually), system cost (which increases 5% annually), or system output (which decreases around 1% annually).

This means consumers look at solar panels the same way they do most consumer electronics – as the item gets older, it gets less desirable, even if it work just as well as a newer model. Interestingly, the LBNL findings track with data from PV Value, a spreadsheet tool developed by Sandia National Laboratories to determine the value of solar PV systems through system income.

What About Other States Or Third-Party Systems?

The LBNL report is great news for homeowners in California, but it’s not surprising considering the state is the epicenter of the US clean tech market while leading America in distributed solar generation. What about the rest of the country, or the growing number of homes that install solar through leasing programs or third-party companies?

Not to worry – the report’s authors plan to cover those questions starting with the next edition of their research. Subsequent studies will examine solar home premiums from markets beyond California, the change in premium through the housing market crash and recovery, sale price differences between customer-owned and third-party owned solar arrays, and the impact system age and retail electricity rates have on solar home premiums.

Add it all up, and America’s sizzling solar industry could get even hotter as homeowners look past environmental benefits to see the pure investment opportunities rooftop PV systems generate.

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About the Author

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate policy public relations company based in Oakland, CA.

  • Russ Tanner

    What about commercial solar? Does having solar panels on a commercial building impact value? Is there any information? I’m also curious if having a PPA on a commercial building would detract potential buyers (if a building needed to be sold).

    • BcFactor

      Russ, I’ve been in the industry for a while now and know inside and out PPA, Lease and Purchase. I don’t know how to private message on here so if you’d like, reply back or I can send you my contact info.

  • R.R. Roberts

    Solar is turning into a liability and decreases the value of homes in the San Francisco Bay Area. When a home owner signs a solar contract it’s an agreement to purchase 20 years of energy at a higher than market rate. If the system is over sized because you install energy savings appliances and lights you are penalized and have to pay the inflated rate to the solar company.

    The solar energy energy industry is turning into the next Enron.

    • Bob_Wallace

      “Solar is turning into a liability and decreases the value of homes in the San Francisco Bay Area.”

      You have data?

      • John Redcorn

        Why do people comment on something that,you can tell by the response havent a CLUE on what they are talking about…That has got too be the most uninformed answer I have seen on a subject. Instead of saying “I dont know” people would rather type anything,I guess too see there name??

        • Bob_Wallace

          I have a clue. Do you?

          Do you know of any data that shows solar leases are lowering property values or is that simply something that you want to believe?

          What’s your basis for apparently agreeing that the solar industry is turning into the next Enron?

          • John Redcorn

            Bob I just noticed you replied too a comment I made about solar…I have too be honest and tell you I dont remember why I responded the way I did..I do know I was agreeing with you…IM fairly certain your pro solar as am I I had it installed on my home 2 yrs ago..I was going too do it 20 yrs ago,but wasnt able to

          • Bob_Wallace

            Thanks. I suspect I misread what you intended.

            At the time we were getting comments by a couple people who make money off selling solar and were running down leasing because “it lowered property values”.

            But they never produced any data. I was likely “energized” when I read your comment and read it the wrong way.

            I accept that solar leases might lower house prices, but it takes data to prove that one way or another. Solar leases may, in fact, raise house prices. Without data….

            BTW, I’ve been off the grid with solar for over 25 years.

    • BcFactor

      I’ve been in this industry for over 7 years now and have personally helped dozens of folks with a PPA (not a lease) that sold their home within the last few years. They loved it when it came to selling their home because the realtor listed what the bills used to be and what they wer currently. Every time it was a big selling point because once the buyer did a little math it was and brainer even if their usage was a little lower. It’s simple math and if anyone wants to see it just let me know, it’s what I do for a living anyways, especially when compared to PG&E.

      • Bob_Wallace

        I’d like to see some numbers.

        • BcFactor

          For some reason I can’t copy my text from this just in case I lose it when signing in from an iPad so just know that this is BcFactor.

          Apologies on the delay, the math is simple like I was talking about. Now there are bunch of companies that do have one-sided lease/PPA program when it comes to being transferred. I’m the realm of the PPA with a simple contract between the homeowner and the company (VS the 20-30 pages lease and PPA contracts that other companies have their lawyers go through with a fine tooth comb that most homeowners don’t understand).

          It’s safe to say we all pay an electric bill unless we live off the grid. So for some it does make sense to invest but for others, the easiest way is to look at it as the money they are spending anyways.

          So let’s just deal with some facts. ( you can easily Google this info for sources)
          1. CA energy prices are very high especially with the tiered system where the
          more you use the more the rate goes up.
          2. CA energy prices keep going up. Last year tier 1 with PG&E was $0.135,
          today it’s over $0.16. Not to mention all the other rate increases. In fact if you
          look up PG&E rate history you’ll see that rates have changed every
          2-3months the last year and half alone. But for history sake, avg increase is
          usually 5% or more if we want to be conservative.
          3. Big things to remember that affect energy prices, CA does not produce
          enough energy to meet consumer demands and thus we import. CA is the
          largest importer of coal in the US (roughly 15% comes from coal) and the
          industry is dying since they can’t afford to retrofit to new EPA regulations.
          Another factor is Large Hydro (a few years ago, roughly 10%) where given the
          huge drought, well…. You get the point. I think it’s safe to say that prices aren’t
          going down any time soon if it all if history has told us anything.
          4. With my company the homeowner can purchase the system anytime at a
          discounted/depreciated rate for every year that goes by. Most leasing and
          PPA companies don’t allow a purchase for at least 5 years let alone at all for
          the 20-25 years that their contract binds the homeowner to.
          5. There is a lot of confusion out there on how the tax credit works let alone
          there are a lot myths and misconceptions in the solar industry. Most homeowners really can’t use the tax credit to the full benefit because they don’t owe federal taxes. Companies tell homeowners that if they get let’s say a $30,000 system, they’ll get $9,000 tax credit which they use in their proposals to bring the net purchase down to $21,000. I believe this is pretty misleading since everyone has a different tax situation and I’ve helped out some people that were told by other companies that they get all the money back when they go to do their taxes the next year. Granted, for some people it does make more sense to invest in a system since they can take advantage of the full amount if they owe at least that much.

          So to get to the math.

          Let’s say a homeowner in the Bay Area uses an avg of 1000kWh/mo, that’s roughly a $240-260/mo given where they live.

          So $250/1000kWh=$0.25 per kWh= Said homeowner is paying an avg per unit.

          Now with the PPA at $0.15 per kWh produced and custom sized for the homeowner that’s a saving of 40% right out of the gate. That’s over $1000 in savings just the first year alone!!!!

          The homeowner had to put no money down whatsoever and went from paying Utility one month to Solar the next after the Utility officially turns it on.

          Let’s take someone who use about 600kWh/mo. That’s around $115/mo.

          So $115/600kWh=$0.191 Which equals a savings of at least 20%

          So when it comes to selling the home this is usually I big selling point. Like I said before I’ve had at least couple dozen that have sold and have transferred the PPA with really no problems. What I mean by that is there were a couple homeowners that called me when they had someone interested but the buyer thought it was a lease at first and didn’t want it. All I had to do was talk to the potential buyers and in 15-20 show them the math and the savings since we had the homeowner’s old utility bills and their concerns went right out the window.

          I’ve even had a homeowner that bought the system in the home sale and just included it in the mortgage and the seller actually made a little bit since the resale value statistics are out there.

          All in all rates keep going up and who knows what’ll happen but at least there’s an alternative from the major utilities.

    • Michael

      You’re talking about leasing/PPA. Not an owned system. There’s a difference.

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