Do Home Solar Panels Add to the Value of Your Home?
Our local newspaper here in Washington DC, The Northwest Current (June 29, 2011), reported on a home for sale under the following headline: “Wardman-style row home offers solar savings.” The article reports that the owners of the home in the Petworth part of town installed a solar energy system on their home and are now saving $50 to $80 per month on utility bills.
Is this house worth more because of its solar panels?
So if you have a home with solar panels and next door you have a home without solar panels, you would expect that there should be a premium for the home with solar panels. So you have just sunk $20,000 for your solar panel system—and you will get some of that back from incentives, but will you be able to recoup any of your out of pocket cost if you move in a year.
Think of it this way, the home with the solar panels allows the homeowners to save an average of $780 annually (using the example of the house in Petworth). If the useful life of the solar energy on the home is 25 years, and we use a discount rate of 5% per year, then the economic value of the solar panel system you have on your home is $11,000. All things being equal, and assuming that the market is rational, a purchaser of your home should pay an additional $11,000 over what the house next door is selling for without solar panels on the roof.
The argument for solar panels is even more compelling than putting in a new bathroom or a new According to this study on Realtor.org, the cost recouped on a minor kitchen remodel is 72.8% — better spend your money on an entry door replacement, where you recoup 102% of the cost of the project.
You would expect that you would recoup at least the present value of the energy savings over the next 25 years if you go sell your home. There is scant evidence out there and we at SolarTown wanted to see if this assumption was correct. Accordingly, we are now completing a study to see whether homeowners do indeed receive a premium for the “solar savings” of having a solar energy system on the home. We are about to release the results of a study on this issue. Stay tuned to the SolarTown Learning Center to see the results