Berkeley Study: Solar Adds $15,000+ to Average Home Value
Economics of Renewable Energy | January 27, 2015 | Posted by Fred Greenhalgh
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Many prior studies have suggested that solar adds to a home’s value, but they have often been limited in time range and geographic scope. Now, a team of scientists from Berkeley Labs, in partnership with universities and appraisers, has found that solar unequivocally improves the value of a home, on average by an amount of $15,000.
The data is based on analysis of “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.”
Some key findings:
- There was no statistically significant difference in the solar premium between new and existing homes.
- While not conclusive, the study suggests that solar, regardless of size, adds a special appeal to home buyers (the ‘green cachet’), meaning that smaller systems (2-4kw) may have a disproportionately high premium relative to their actual energy production.
- Solar value is “statistically similar to [market premium approaches] estimated using the income and cost approaches, methods familiar to appraisers.” (http://emp.lbl.gov/news/berkeley-lab-illuminates) – meaning that appraisers should be able to integrate solar valuation into already understood methods of assessing other premiums features of a home.
- The study did find that the premium for a PV system depreciated faster than the system’s output – i.e. a 1 year old system might fetch a $6/watt premium whereas an 8 year old system might fetch a $3/watt premium (even though the system is producing almost 100% of the power in year 8 as it was in year 1). On the other hand, a PV system in year 8 would have by that time repaid nearly all of the original investment to its owner, so any premium is a great deal!
So the good news for solar customers?
- You can feel confident that your solar investment will pay for itself, either over the life of the system as you live in your home, or by fetching a premium price should you need to sell your home.
- Studies like this make banks increasingly comfortable with solar, meaning it should continue to get easier to use a home equity loan or home equity line of credit product to invest in solar.
For the data-hounds, there is a great deal more information on this report, and an upcoming webinar on its findings, available online at: https://emp.lbl.gov/publications/selling-sun-price-premium-analysis.