Homes with rooftop solar sell at a premium, study finds 

Source: Daniel Cusick, E&E reporter • Posted: Friday, January 16, 2015

Homes equipped with rooftop solar panels are often worth thousands of dollars more in resale than similar properties without solar, according to new Energy Department research.The study, led by the Lawrence Berkeley National Laboratory and Sandia National Laboratories alongside experts from academia and the real estate industry, found that homes with host-owned solar photovoltaic (PV) systems fetched an average of $4 in additional value for each watt of PV installed.

That converted into a roughly $15,000 premium for a home with an average-sized 3.6-kilowatt PV system, according to the analysis, which evaluated 22,000 home sales in eight states from 2002 to 2013, including 4,000 homes with solar panels.

Ben Hoen, a Berkeley Lab researcher and lead author of the report, said the findings suggest that solar systems are becoming more common in both new and existing homes and that such systems are viewed as key assets to homebuyers.

“This is a very important finding for people who are considering putting PV on their homes and who might be looking to sell in a fairly short period of time,” Hoen said. At the same time, it suggests prospective homebuyers who might have been wary of a solar-powered home a decade ago are viewing PV systems as assets that help maintain a property’s value as well as lower their energy costs.

The research, which was funded by DOE’s SunShot Initiative and is part of a broader series of studies on PV solar markets, is believed to be the most comprehensive study to date on price premiums for solar-equipped homes. Researchers evaluated real estate transactions in eight states, with homes ranging in price from $200,000 to $900,000, Hoen said.

The vast majority of the transactions evaluated were in California, which has the nation’s largest number of solar-equipped homes. But evaluations were also made on homes with solar PV systems in Florida, North Carolina, Maryland, Pennsylvania, Connecticut, Massachusetts and New York.

And with a surge in the number of solar-equipped houses across the country — now estimated at more than a half-million — experts say such data will allow banks and real estate experts to more accurately value new and existing homes with solar arrays. That, in turn, will likely facilitate additional growth in the residential PV market.

Calif. sellers have the most ‘green cachet’

“As PV systems become more and more common on U.S. homes, it will be increasingly important to value them accurately, using a variety of methods,” said Sandra Adomatis, a report co-author and appraiser who helped develop the Appraisal Institute’s Green Addendum. “Our findings should provide greater confidence that PV adds a quantifiable premium to a wide variety of homes in California and beyond.”

Generally, homes in California saw the highest overall premiums, Hoen said, reflecting both the higher net cost of solar in California as well as higher costs of electricity. But the premiums remained relatively stable across all house price points, suggesting that middle-income buyers were as likely to pay extra for a home with a solar array as more wealthy buyers.

“This isn’t only for buyers of expensive homes,” Hoen said. “In fact, our data set shows that relatively inexpensive homes are seeing strong premiums for solar.”

The study also found only a small difference in premiums buyers were willing to pay for solar systems in new versus existing homes. And larger solar systems — such as a 10 kW residential array — were not valued on a per-watt basis much higher than smaller systems. The researchers attributed the trend to a home’s “green cachet,” meaning that even a solar system of 1 kW or smaller was perceived to have high value.

Where the researchers did find a substantial difference in real estate premiums was in newer versus older solar systems. For example, while recently installed systems were able to claim as much as $6 per watt in added value, systems eight years or older saw premiums of roughly $3 per watt.

Hoen noted that such findings should make solar even more attractive to builders of new homes as well as to owners of existing homes who plan to install a solar system to add resale value in the near term.

The fundamental point for both sellers and buyers is, “If you install solar and then sell your house, you should be able to get a significant portion of your money back,” he said. “That’s something we couldn’t say with as much confidence before.”