Appraising Solar Energy SystemsUntil recently, the number of US properties with solar was too small for appraisers to determine what impact installed solar has when a property with solar is sold. There were a few studies indicating that solar upped sales prices and made property sell faster, but these studies were based on fairly small samples of residential solar systems only.
Now the guess-work is over. Sandia National Laboratories has developed a valuation tool that can analyze the likely re-sale value of both residential and commercial solar energy systems. The Sandia Labs tool is called “PV Value” and has been endorsed by the Appraisal Institute, the nation’s largest professional association of real estate appraisers.
Department of Energy, California Study
A 2011 study by the Department of Energy’s Lawrence Berkeley National Laboratory in Berkeley, California, found that installed solar increased home resale value. The average increase in value was about the same as the cost of the solar electric system. The authors calculated that, on average, photovoltaic systems add about $5.50 per watt to a home’s resale value.
“We find compelling evidence that solar PV systems in California have boosted home sales prices,” say researchers at the Berkeley Lab. “These average sales price premiums appear to be comparable with the average investment that homeowners have made to install PV systems in California, and of course homeowners also benefit from energy bill savings after PV system installation and prior to home sale.”
National Renewable Energy Laboratory, Colorado Study
In a 2013 study analyzing real estate and solar, the National Renewable Energy Laboratory in Golden, Colorado, found that Denver homes with solar appreciated 20% more and sold 17% faster than non-solar homes. NREL did exhaustive interviews with home buyers and found they were more likely to purchase a home with solar – in other words, solar homes sold faster.
Now There Is a Valuation Standard
The valuation program was developed by Sandia Labs for the Department of Energy. It has brought standardization to the appraisal of solar energy systems. Real estate appraisers and potential solar purchasers now have a systematic way to predict the likely amount that solar will add to the value of a property.
The Sandia Labs program uses the income capitalization approach to solar valuation. The program calculates the present value of the future solar income stream and works for both residential and commercial property.
In order to determine a system’s re-sale value using the Sandia program, a number of technical variables about the solar energy system and local energy market must be entered, so the analysis should be done by either a professional appraiser or Energy Consultant.
At SunUp we’ve found that the initial re-sale value of a solar energy system is usually about the same as the cost of the system. We offer free energy consultations to property owners interested in solar and our Energy Consultants use the Sandia program to show property owners the projected re-sale value of a system on their property.