When purchasing a home, homebuyers are faced with many options that can affect the value of their property. Often, one of those questions is whether or not to keep or add a solar panel system. Our team at Energy Sense Finance spent the past two years gathering data from 2015 and 2016, in partnership with Sandia National Laboratories, to help homeowners and other real estate professionals answer that very question.
The new U.S. Solar Market Value Report, funded in part by the U.S. Department of Energy SunShot initiative, provides real market data, which further suggests that solar adds value to real estate properties.
PV Value® Data
Until recently, there had not been an effective way to determine the value that solar will add to a home. That changed with the release of our free to use PV Value® tool in 2009, which allowed homeowners, appraisers and real estate professionals to assign a value to solar. Anonomized and aggregated data collected during 2015-2016 from the PV Value tool was used in the U.S. Solar Market Value Report.
Variability Between States
The data came from the three states with the largest number of transactions recorded in PV Value: California, Arizona and Massachusetts. The report reveals that the mean value for a solar system in 2016 was: $3.93/watt in California, $2.17/watt in Massachusetts and $2.34/watt in Arizona.
New vs. Old Systems
The report also addresses new versus older systems, and found that older solar systems do, in fact, retain their value. Specifically, a 12-year old solar system was found to retain 50 percent of the value of new systems installed in 2016. This means that, not only do homeowners with solar have the opportunity to save on monthly energy bills, they also have equity in the system itself, which retains significant value over time.
Size Does Matter
Homeowners can also rely on the report to provide valuable information in regard to system size. Our team found that anticipated operation and maintenance costs do have a slight impact on the overall value, with systems over 5 kW having a slightly higher value than those below 5 kW.
Borrowing Rates are Important
Finally, our teams also looked into whether or not borrowing rates impact the value of a system, and found that yes, they do. Lower borrowing rates were found to have a positive impact on the value. Mortgage heavyweight Fannie Mae is attempting to impact homebuyers’ ability to purchase solar by offering low interest rate financing with their HomeStyle Energy Mortgage, released in May of 2016. Freddie Mac may offer similar products in the future.
The U.S. Solar Market Value Report report provides professionals involved in the real estate transaction process with real market data that supports homeowners in understanding the value that solar adds to their homes. Armed with this knowledge, they can also help homebuyers make smarter purchasing decisions.