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How Does Solar Add Value To My Home?

For years solar novices and other proponents of solar within the industry would argue that for every $1 in annual utility savings your home's solar system generated, you would realize an increase of $20 in home value.  If your solar PV system saved you $1,000 a year, then your home would likely appraise and sell for $20,000 more. I knew of many solar companies and consultants that cited these statistics as empirical evidence set forth by the Department of Energy. The fact is, there was nothing concrete to support that theory and the research behind it was not very thorough.  

Finally, in April of 2011, the Lawrence Berkeley National Laboratory presented to the Department of Energy its report entitled, An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California. It is in my opinion the most comprehensive analysis ever done on the re-sale value solar has on your home.  I was selfishly pleased that the report focused on homes in California only, with as many as 138 solar homes in Contra Costa County where I live. The focus of the research was to investigate the selling prices of solar homes and compare those to nearby non-solar home sales. The report detailed 1,894 solar homes and 70,425 non solar homes sold through 31 California counties from 2000 to 2009. In short, it was found that home's with solar fetched a sales premium of $3.9 to $6.4/watt! When you consider state and federal incentives for solar, those sales premiums are likely to be more than your net investment to go solar!

For example, let's say your'e putting  your home up for sale next week for $800,000. 2 years ago you installed a 5 kilowatt (same as 5000 watts) solar electric system on your roof. Your neighbor down the street has the exact same model home you have and is also selling their home at an $800,000 listing price, but they have no solar. If we take Berkeley Lab's findings and use the conservative number above of only $3.9/watt, that would equal a sales premium of $19,500 over what your neighbor's home will likely sell for. (5000watts X $3.90) If you had a sharp realtor, you'd list your home for a minimum of $819,500 and easily sell it before your neighbor's home sells for only $800,000. 

Now let's examine what this 5 kilowatt system originally cost you to invest in.  In Northern California a few years ago, you might have hired a solar contractor to install that 5 kilowatt system for about $25,000. That would be a fair price. As a result of your decision to go solar, you also would have received about a $2,000 CA State Rebate and a Federal Tax Credit of about $6,900. That would mean your Net Solar Cost was only $16,100, and you just fetched an extra $19,500 on the sale of your home! In the report however, many homes netted over $30,000 in sales premiums for a 5kW system.  The bottom line is this: California is a state filled with earth nuggets; we place a lot of value in home's that have solar. Lastly, don't forget, you also would have saved about $4,500 on your electric bill in those last 2 years. So it's reasonable to argue that solar is an appreciable asset; the only home improvement you can invest in that will not only be 100% recouped upon the sale of your home, but actually turn a huge profit. 

Check out the 53 page report by clicking the button below. Don't worry, I've highlighted in Yellow the good stuff for a quick read.

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