For years, many homeowners who have made the move to rooftop PV systems have been more excited about being on the leading edge of clean energy than the potential boost to their home’s resale value. Now, according to a recent study conducted by the Lawrence Berkeley National Laboratory, a host-owned PV system can add an average of $15K to a home’s value.
According to Ben Hoen, the report’s lead author, earlier studies were limited by their sample size and scope. The new study analyzed 22,000 home sales, with nearly 4,000 of the homes including PV systems. This is more than double the number of PV home sales previously analyzed and provides a broader, more current, picture of the impact PV systems have on a home’s resale valuation.
Another unique aspect of the Berkeley report is that it spanned a period of time in the real estate market that included a historic boom, bust and recovery cycle.
OWNERSHIP IS KEY
A key finding of the Berkeley report is that, while homebuyers are willing to pay more for a home with its own PV system, the system must be host-owned, and not leased or owned by a third party. This finding means that homeowners who want to add a PV system to their home will have more to consider when weighing whether to buy or lease. For those looking to their PV system as a source of long-term value, the argument is going to be heavily swayed toward purchasing.
Hoen and his colleagues found that homebuyers are willing to pay a solar premium for any PV system, and will pay incrementally more as the system’s size and output increases.
WHO’S DRIVING THE SOLAR PREMIUM? THE NEIGHBORS.
An earlier study conducted by the National Bureau of Economic Research had some interesting findings that may provide an interesting augmentation to the Berkeley study. According to the NBER study, certain neighborhood characteristics such as a large number of registered Prius owners could boost the solar premium homebuyers paid. In addition, a neighborhood regarded as environmentally aware, as evidenced by a large number of registered Green Party members, for example, also positively affected the solar premium.
A BRIGHT FUTURE
With over half a million residential PV systems already installed and more systems being added every day, homeowners will be paying closer attention to their systems ability to provide a sizable return on their investment. And, as real estate professionals zero in on a standardized methodology for determining a PV system’s value, all indications are that most home sellers will be pleased with the results.