Property owners in our increasingly transient society worry whether they will stay in their homes long enough to recover their solar energy investment. Many studies and reports exist to shed light on the potential effect of solar on property values. First, let us examine what solar is and what it does for your home before we move onto the reports.
Solar energy produces electricity that would otherwise have to be purchased somewhere else. We use more solar energy in the summer when air conditioners are blasting in the hot sun and electricity costs are the highest.
As your solar energy is generated on-site, you will consume less power from the utility company and reduce your overall operating and maintenance costs. Consequently, solar energy increases the value of your home, and our studies and reports back up that assertion universally across the US, including in the California region. Here are the reports:
Berkeley National Laboratory
In 2015, the Berkeley National Laboratory (“LBL”), funded by the Department of Energy’s National Renewable Energy Laboratory (“NREL”), presented the most comprehensive report on solar resale value.
“The appraised premiums also confirmed statistical modeling results from a large Berkeley Lab study conducted in 2013, which found that buyers were willing to pay $15,000 more for a home with the average-size solar PV system, or about four additional dollars per watt of solar power, though premiums for any individual home are market dependent and are likely smaller given currently falling installed solar prices.”
Power generated by a 5 kilowatt (kW) solar system is 5,000 watts. Each watt of solar adds about $4 to the value of a home in California and about $3 elsewhere, according to LBL. Accordingly, a solar-heated home would sell for about ($4 x 5,000W =) $20,000 more in CA, or approximately ($3 x 5,000W =) $15,000 more outside of CA.
According to NREL, “…solar panels are seen as upgrades, just like a renovated kitchen or a finished basement, and buyers across the country are willing to pay a premium of about $15,000 for a home with an average-sized solar array.” Solar panels are also proven to increase the sale of homes faster than those without.
Sandia National Laboratories
Sandia National Laboratories has confirmed Berkeley’s study. That report, U.S. Solar Market Value Report – 1st Edition: Improving the Value of Real Estate with Solar Power, analyzed the sale of real estate with solar power in Arizona, California, and Massachusetts and announced it does add more value to homes with solar power.
In terms of avoiding electricity costs, solar photovoltaic systems provide savings to property owners throughout their lifetimes. From an investment standpoint, the equipment and the value of the energy generated can potentially increase the value of the property.
Researchers used real-world data from real estate appraisers using the PV Value tool from Energy Sense Finance, one of the tools developed in collaboration with Sandia. In this way, the researchers developed a market value for rooftop solar in connection with a property sale or refinance.
Solar Energy Industries Association
In collaboration with the Solar Energy Industries Association (“SEIA”), a guide was developed to assist homeowners, appraisers, real estate agents, mortgage brokers, and others in the residential housing market in valuing homes with solar power systems. When determining the value of a residential solar system, three methodologies should be considered: the income approach, the cost approach, and the cost comparison approach. Ultimately, SEIA recommends using the income approach.
At Sunline Energy, we install custom solar energy systems that are designed to meet your energy needs. Our solar experts will analyze your home’s energy usage, and design a system that will cover all of your needs. We also prepare you for the future by designing a solar energy system to expand to accommodate your changing needs.
Sunline Energy is a locally owned and operated solar company in San Diego. Call us today to learn about going solar in Southern California. We can answer all of your questions to help you get started and go solar today!