Solar Homes Sell at a Premium
What happens when word gets around?
A new Berkeley Lab report, “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California,” provides some evidence that a significant benefit comes with selling a home with a solar power system.
What are the implications for utilities if the trend continues or is experienced outside of California? The study doesn’t consider those prospects, but the obvious impact might be to encourage wider adoption of home systems.
“Relatively little research exists that estimates the impacts of those PV systems on home sales prices. A clearer understanding of these effects might influence the decisions of homeowners considering installing PV on their home or selling their home with PV already installed, of home buyers considering purchasing a home with PV already installed, and of new home builders considering installing PV on their production homes,” the report says.
Almost 100,000 PV systems have been installed in California alone, more than 90 percent of which are residential. Innovative financing methods, called into question by lending underwriters, have played a major role in that.
To determine whether PV homes sell for significantly more than comparable non-PV homes, Berkeley Lab analyzed a dataset of approximately 72,000 California homes, almost 2,000 of which had PV systems installed at the time of sale. The analysts found strong evidence that California homes with PV systems have sold for a premium over comparable homes without PV systems.
The premium coalesced at nearly $17,000 for a relatively new “average-sized” based on the sample of homes studied PV system of 3,100 watts (DC). This corresponds to an average home sales price premium of $5.50/watt (DC), with the range of results across various models being $3.90 to $6.40/watt.
Other key findings include:
• When the data are split between new and existing homes, a large disparity in premiums is discovered: The research finds that new homes with PV in California have demonstrated average premiums of $2.32/watt, while the average premium for existing homes with PV has been more than $6/watt.
• The research suggests several possible reasons for the lower premium for new homes, including that new home builders may also gain value from PV as a market differentiator, and may therefore have been willing to accept a lower premium in return for faster sales velocity.
• The research finds strong evidence that homes with PV systems in California have sold for a premium over comparable homes without PV systems. More specifically, PV as a standard (as opposed to an optional) product on their homes and perhaps been willing to accept a lower premium in return for faster sales velocity and decreased carrying costs.
• The research also finds that, as PV systems age, the premium enjoyed at the time of home sale decreases, indicating that buyers and sellers of PV homes may be accounting for the decreased efficiency and remaining expected life of older PV systems.
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