Solar Power Boosts Home Resale Value, In California

| by David Serchuk
Solar Power Boosts Home Resale Value, In California

The Golden State is the place to be if you want to see a return on your residential solar investment dollar. Or so confirms a recent report from Lawrence Berkeley National Laboratory titled: “Exploring California PV Home Premiums.” The downside is that these premiums degrade pretty quickly over time.

The report was released this December, and makes a pretty good claim for those looking for an initial financial incentive to invest in a residential photovoltaic (PV) system. The report says that for each kilowatt generated by a home’s solar system it earns a $5,911 premium in value. For a system that is average across all block groups in terms of age (2.9 years) and size (3.7 kW), the estimated premium is $24,851.

There is another side, however, which is that these premiums decline fast as systems age. Specifically, the report says that for each year a system ages that same premium is reduced by $2,411. “And thus the premiums for homes with older systems (e.g., between 6 and 10 years old) appear to be substantially smaller than predicted,” the study’s authors wrote.

This means that while there is a bonus for residential PV systems these systems also face real markdowns as they age, suggesting they are priced similarly to other major home appliances, and not like say, a kitchen remodel, where a facelift adds longstanding value to the home.

The study’s authors believe the market marks down the value of these PV systems at a greater rate than expected. “The market in the 2001 to 2009 timeframe seems to be discounting PV systems more quickly over time than the energy generated from the system is degrading (which affects the Income Estimates) or the system is depreciating in value (which affects the Cost Estimates),” they wrote. “A degradation rate of 0.5% per year is considered normal for crystalline PV panels (which are on most all residential PV installations) … yet our results imply that the market might be discounting PV systems at approximately 9% per year.”


Topics: Solar Power


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