Homes with solar PV systems sell for a premium over homes without solar installations, according to new research by the U.S. Department of Energy's Lawrence Berkeley National Laboratory.
Although the premise that installing PV will add value to a home has long been promoted by installers and others in the industry, the new study – titled ‘An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California’ – confirms and quantifies this effect.
According to the lab, this research is the first to empirically explore the existence and magnitude of residential PV sales price impacts across a large number of homes and over a wide geographic area. Over the past few years, an increasing number of homes with PV systems have sold, particularly in California, but relatively little research has been performed to estimate the impacts of those PV systems on home sales prices.
Overall, the researchers found that homes with PV in California have sold for a premium, expressed in dollars per watt of installed PV, of approximately $3.9/W to $6.4/W.
‘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,’ says the report's lead author, Ben Hoen, a researcher at Berkeley Lab.
The $3.9/W-to-$6.4/W increase corresponds to an average home sales price premium of approximately $17,000 for a relatively new 3.1 kW PV system (the average size of PV systems in the Berkeley Lab data set), and compares to an average investment that homeowners have made to install PV systems in California of approximately $5/W over the 2001-2009 period.
‘This is a sizable effect,’ says Ryan Wiser, a Berkeley Lab scientist and co-author. ‘This research might influence the decisions of homeowners considering installing a PV system and of home buyers considering buying a home with PV already installed. Even new-home builders that are contemplating PV as a component of their homes can benefit from this research.’
The lab analyzed a dataset of more than 72,000 California homes that were sold between 2000 and mid-2009, approximately 2,000 of which had a PV system at the time of sale. The research controlled for a large number of factors that might influence results, such as housing market fluctuations, neighborhood effects, the age of the home, and the size of the home and the parcel on which it was located, the researchers note.
The resulting premiums associated with PV systems were consistent across a large number of model specifications and robustness tests. The research also showed that, as PV systems age, the premium enjoyed at the time of home sale decreases.
Additionally, existing homes with PV systems were found to have commanded a larger sales price premium than new homes with similarly sized PV systems.
‘One reason for the disparity between existing and new homes with PV might be that new-home builders also gain value from PV as a market differentiator that speeds the home sales process, a factor not analyzed in the Berkeley Lab study,’ says Berkeley Lab researcher and co-author Peter Cappers. ‘More research is warranted to better understand these and related impacts.’
The full report can be downloaded here.
Photo credit: SolarCity