$6.4/watt added to existing home values
Lawrence Berkeley National Laboratory conducted an analysis on the effects of residential photovoltaic systems for California home sales prices in the spring of 2011(see report here). Their findings should be shocking to anyone on the fence when it comes to purchasing a residential pv system for their home.
After an extensive study including 72,000 California home sales, they found existing homes with installed solar systems had an average sales price premium of over $6/watt. This means for an average PV system of 3.1 kW, homes sold for $19,800 more than comparable homes without solar installations.
- Realized Value of Solar Installation
- When comparing pros and cons of solar power, home owners need to take into account the increase in asset value of their homes
- Future value
- As utility bought electricity prices rise, the value of solar assets locking in low cost electricity will rise
- Perception of value
- Value is not a direct science - when the true value of clean energy is realized by a larger population, solar installation asset values will see significant gains
Realized Value of Solar Installation
The Lawrence Berkeley National Laboratory study showed for most home owners, after federal and local incentives, the initial purchase of a photovoltaic system held no negative effect on the home owner's personal asset wealth. The value of the purchase is directly reflected in an increase value of the property.
In addition, after a 3kW solar installation and average residential electricity rates of 17.5 cents/kWh, the homeowner is typically saving between $800 and $1,200 per year.
Savings down the road
As we can see, a purchase of solar power instantly saves money and preserves net value of a home owner's assets. How do things look down the road a few years?
Electricity rates purchased from utilities are expected to increase at a rate of 7% per year for the foreseeable future. This translates into greater savings, and with greater savings, larger premiums on home values.
Perception - psychology's influence as the world changes
The price of any commodity is set based on society's combined "feeling" of what that commodity's value is thought to be. Presently, solar power and value of renewable energy is low across the country and state of California. The idea of global climate change, pollution from the burning of fossil fuels and expectant rise in costs of electricity are ideas on the fringe of people's minds.
As prices of electricity continue to climb and global climate worries take center stage, the value of commodities addressing these issues will rise dramatically. As such, it is expected that home values with solar power already installed will gain greater value.