Report: Homebuyers willing to pay premium for solar
Okay, I’m a little slow on the uptake on this but I’ve been pursing a recent report from Lawrence Berkeley Laboratory on the effect of installing a rooftop solar array on the sale price of homes in California.
(It makes for dense reading and unless you’re really into “hedonic pricing models” and “difference-in-difference model,” you might want to stick with the two-page summary.)
The upshot: California homes that sport solar panels sell for a $17,000 premium for an average newish 3.1-kilowatt photovoltaic array.
“This is a sizable effect,” Ryan Wiser, a staff scientist at the Lab and a coauthor of the report, said in a statement. “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.”
Similar studies have been done previously, but the Berkeley report is apparently the first to analyze the statewide real estate market. California is by far the nation’s largest solar market, with some 100,000 rooftop systems installed. About 90 percent of those have been put on residential roofs, according to the report.
The scientists analyzed California 72,000 home sales from 1999 to 2009. Nearly 2,000 of those homes had solar panels at the time of sale.
“When the dataset is split between new and existing homes, PV system premiums are found to be markedly affected … with new homes with PV demonstrating average premiums of $2.3 to 2.6/watt, while the average premium for existing homes with PV being more than $6/watt,” wrote the authors.
Translation: Buy a house in a new subdivision where solar comes standard and your home values could rise between around $7,000 and $8,000. Purchase an older home with a solar array and the value rises by $18,000 or more. (That’s assuming a 3.1-kilowatt array has been installed.)
The authors speculated that the disparity might be explained by differences in installation costs and homebuilders’ willingness to discount the price of solar systems in bid to increase sales.
The report notes that the relative premium commanded by solar panels on a home drops as the system ages and its efficiency declines.
And why would a prospective homeowner be willing to pay a premium for a house with solar panels on the roof, beyond green bragging rights? For the same reason the existing owner probably installed the system: Lower electricity bills, the report concludes.