Report: Solar Homes Fetch Higher Prices

Content by Earth2Tech – By Ucilia Wang at Earth2Tech

Thu Apr 21, 2011 12:35pm EDT

Does a solar electric system add to the sales value of a home? Solar energy advocates like to say it does, but that’s often based on

anecdotal evidence. The Berkeley Lawrence National Laboratory decided to test this claim, and the result is a report being issued Thursday that showed that, indeed, solar homes command higher prices.

The analysis showed solar homes in California were sold for a premium at between $3.90 per watt to $6.40 per watt, the Berkeley Lab report said. That spread amounted to an average of a $17,000 premium for a fairly new (roughly two years old) 3.1 KW system, which is the average system size in the data, the report said. The premium began to decrease as systems became older.

The lab researchers poured over data about roughly 72,000 homes sold from 2000 to mid 2009, including 2,000 with solar systems.

The average premium tracked closely with the average price of $5 per watt that California homeowners spent to install solar from 2001 to 2009 (the price took into account state and federal incentives), the report said. The report authors are Berkeley lab researchers Ben Hoen, Ryan Wiser and Peter Cappers and San Diego State University Economics Department Chair Mark Thayer.

California is the largest solar market in the country as a result of its incentive program that defrays a big chunk of the installation cost. The state is home to nearly 100,000 grid-tied solar systems, and more than 90 percent of them are located at homes. It also has a good data collection system to track installations and price movement, which Berkeley Lab has analyzed in several reports in recent years. The lab issued the latest report last December.

Little research has been done to look at whether adding solar allows homeowners to mark up the sale price of their home in a similar way that, say, a kitchen renovation can help boost the price. Homeowners typically go solar because the technology generates a cleaner source of electricity and, thanks to government incentives and private financing options, they could cut their utility costs. But they don’t necessary live at the same home for the 20-25 years that a solar system is supposed to last. Being able to recover some of the installation cost makes for an attractive selling point for consumers who weigh the benefits and costs of installing solar.

Past studies have shown lower energy bills help to increase a home’s sale price, but those studies focused on energy conservation investments. A small study in 2010 has been done to examine 279 solar home sales in the San Diego area, and the result showed a $4.4 per watt average premium. Berkeley lab’s research offered a fuller by investigating data from a much larger region.

Interestingly, the researchers found that existing homes with solar fetched a higher premium than new homes with systems of comparable sizes. Average premium for existing homes was more than $6 per watt, while the average for new homes fell somewhere between $2.3 and $2.6 per watt. The researchers surmised that homebuilders might have been willing to receive a lower premium because they view solar as a way to set their homes apart from other new residential development and use it to speed up home sales. More study will be necessary to explain the discrepancy, the researchers added.