Study: Rooftop solar adds $15,000 premium to home values

Dive Brief:

Rooftop photovoltaic (PV) solar systems can add add a $15,000 premium to the value of a home, according to new research led by the U.S. Department of Energy’s Lawrence Berkley National Laboratory.
The team analyzed almost 22,000 home sales, almost 4,000 of which contained PV systems in eight states from 1999 to 2013. The study is billed as the largest examination yet of PV system impacts on home values.
More than half a million U.S. homes had PV as of 2014, and the study determines the real estate industry will need reliable methods to value these homes appropriately.

Dive Insight:

The largest-ever study on how solar photovoltaic systems add to to home values has determined buyers will pony up about $4 per watt of installed PV, averaging out to a premium of $15,000. In conjunction with Sandia National Laboratories, researchers say they have produced the most authoritative estimates to date of price premiums for U.S. homes with PV systems.

“Previous studies on PV home premiums have been limited in size and scope,” said Ben Hoen, the lead author of the new report. “We more than doubled the number of PV home sales analyzed, examined a number of states outside of California, and captured the market during the recent housing boom, bust, and recovery.”

And while the real estate industry must now determine how to accurately value homes with solar PV systems, researchers believe having greater certainty in those methods will help grow the residential PV market in return.

Additional findings included a scaling-up of the solar premium, where home buyers pay a certain amount for a PV system of any size and incrementally more as system size increases, as well as an apparent sharp depreciation rate for the PV premium in home sales transactions as those PV systems age.

“As PV systems become more and more common on U.S. homes, it will be increasingly important to value them accurately, using a variety of methods,” said co-author Sandra Adomatis, an appraiser who helped develop the Appraisal Institute’s Green Addendum and who has written and spoken extensively on valuing green features. “Our findings should provide greater confidence that PV adds a quantifiable premium to a wide variety of homes in California and beyond," she said.