HOW MUCH DO SOLAR PANELS BOOST HOME SALE PRICES?
Add a new steel front door to your house and you’ll likely recoup the investment if you have to sell. But what about a solar power system? A group of economists looked at that question in a recent study and found that on average, homeowners who install photovoltaic solar panels to power their homes can recover nearly all the investment costs if they move–and that’s on top of the annual energy savings. And if they live in a liberal community (with more registered Green Party members and Toyota Priuses) there’s an even greater payback. The economists looked at utility data, sales records of single family homes and building permit data in San Diego County and Sacramento County from 2003 through year-end 2010. The study, published by the National Bureau of Economic Research, titled “Understanding the Solar Home Price Premium: Electricity Generation and ‘Green’ Social Status,” is available here. For the average installation, the authors found that solar panels added a $20,194 premium to the sales price of the house based on repeat sales data (houses were in the mid-$500,000 range). A system with an originally $35,000 became an effective cost of $20,892 after subsidies and including the federal tax credit. Thus, homeowners appear to recover approximately 97% of their investment costs – in addition to the savings associated with reduced energy bills. By contrast, a luxury kitchen remodel brings a 60% payback, according to Hanley Wood’s 2010-2011 Cost v. Value report. A new steel front door brings a 102% payback. For the Hanley Wood report, click here. Of course it depends on your personality as to whether you get more enjoyment out of ushering guests through a steel door, showing off new granite countertops, or leading a tour of the mechanical guts of a photovoltaic system. The solar study has big implications for state and federal policy. “Are subsidies necessary if the value is already there?” asks Joshua Graff Zivin, one of the co-
authors and an economist at the University of California, San Diego. “It doesn’t mean there is no role, but we don’t see the government in the business of subsidizing people to remodel their kitchens,” he says. In addition, the professors looked at the solar consumer–what types of people live in solar homes. Don’t look for solar installations in small homes in poor minority neighborhoods. Instead, neighborhoods where solar panels have been installed are richer, whiter, more educated, have more registered Democrats, and have larger homes, the study found. When everyone in the household is a registered liberal and the household contributes to environmental causes, the probability of being in a solar home increases even more. Despite the fact that true environmentalists should be minimizing their footprint, homes with solar are bigger, have more bedrooms and bathrooms and are more likely to have a view and a pool. Why should the “green” neighborhoods with high levels of Prius penetration have a solar premium while neighborhoods with a large share of trucks don’t? “In the same way as driving a Prius, with solar panels, you’re advertising that you’re green and virtuous,” Graff Zivin says. Co-author Matthew Kahn, an economist at the University of California at Los Angeles, says the solar premium will just get bigger in California if the state allows people to sell excess power back to the grid, or if it introduces real-time pricing (with the introduction of smart meters) where households will be exposed to high kilowatt rates and solar panels will be more valuable.
Top 10 Solar myths
SOLAR MYTH 1: SOLAR WILL GET MORE EFFICIENT, SO I SHOULD WAIT.
Fact: These days the media loves to hype emerging technologies, but the truth is we're still using the same solar technology we were back in the 1960's. Since then, solar has become only moderately more efficient (unlike computers or cellphones which experience dramatic improvements in short periods of time). Given this stable technology profile and the 26 percent federal solar tax credit (plus many state incentive programs) the best time to go solar is right now. Once installed, your panels will continue to work for decades.
SOLAR MYTH 2: SOLAR DOESN'T WORK IN COOL, CLOUDY, OR FOGGY CLIMATES.
Fact: Solar panels work just fine in ambient light and will produce significant energy in the fog or on overcast days. In fact, solar panels are actually more efficient at cooler temperatures than hot ones. Although this might seem counter-intuitive, consider that solar panels on a rooftop in cool, foggy San Francisco produce only one percent less electricity than one in nearby Sacramento, where it's sunny and hot. Consider too that Germany leads the world in residential solar right now, a country that doesn't have a sunny climate.
SOLAR MYTH 3: I WILL STORE THE EXCESS ENERGY I GENERATE IN BATTERIES
Fact: Nearly all modern solar panel systems are grid tied which means they're connected to the conventional electricity grid. Your system generates power during the day and excess is fed back into the grid through a system called net metering. When this happens, your meter spins backwards and your utility company credits you for that power. At night or on overcast days, you'll use grid power, but you don't generally get charged for it because of all the credit you've generated. This grid tied method tends to be the most convenient for homeowners. Batteries are an option for those who really want them, but they're expensive, bulky, and have to be replaced every five to ten years.
SOLAR MYTH 4: SOLAR PANELS REQUIRE MAINTENANCE.
Fact: Solar panels have no moving parts and do not require regular maintenance. Typically the recommendation is to hose off the panels once a year or so, but many panel owners actually never clean the panels and instead rely on the rain to do the job for them. Typically this will cause only a very slight loss in efficiency (about 5 percent) over the lifetime of the panels. Of course, if any large debris falls onto the panels, it's recommended you remove it. These days, solar systems come with monitoring software that allows you to spot any drops in power generation right away. Often your installer is linked into your monitoring system too, so sometimes they'll e
SOLAR MYTH 5: SOLAR PANELS WILL CAUSE MY ROOF TO LEAK, DETERIORATE, OR COLLAPSE.
Fact: Solar panels actually protect and preserve the portion of the roof they cover, but don't take our word for it. If there's ever a problem with the roof that needs to be repaired, panels can easily be removed. Most solar panels are not attached directly to the roof itself, but rather to a mounted railing system. Installers add sealants to fill in any gaps and often the mounts are surrounded by metal "flashing," or coverings that act as an extra barrier from the elements. Note: if your roof already leaks or needs to be replaced, it makes sense to make roof repairs first before installing solar panels.
SOLAR MYTH 6: SOLAR IS STILL SO EXPENSIVE THAT IT WILL NEVER BE ABLE TO PAY FOR ITSELF (JUST LIKE H
Fact: Perhaps one of the most unfortunate solar myths is that it's only for rich people and/or environmentalists, when in reality many homeowners choose to go solar simply because it eliminates their big monthly electricity bill. In fact, solar is a very wise choice for people who could actually use the extra couple hundred bucks a month that they're currently paying in power bills. Modern financing options have all but eliminated the barrier to entry for solar (big upfront costs), so many households are now able to go solar for little to no money down. Solar is one of the very few household purchases that will actually pay for itself. Studies show that on average, solar panels return four times their cost in saved electricity bills. Typically the savings on electricity bills exceeds the cost of the solar power system in 7 to 15 years. But because solar is replacing a cost the homeowner already has, and because solar finance payments are typically the same or below the cost of their average electricity bill, solar literally hkjdfhglaas a DAY 1 Return on Investment.
SOLAR MYTH 7: WHEN THE POWER GOES OUT, MY HOME IS STILL POWERED.
Fact: When the power goes out, grid-tied systems go out too. That's because it's not safe to be pushing electricity back out onto the wires while workers may be trying to fix the problem, so your inverter (the big box near your meter that turns DC electricity created by the panels into usable AC current) recognizes that the grid is out and shuts your system off. The solution? Spend a couple hundred on a generator or don't worry about it too much; the power doesn't go off that often.
SOLAR MYTH 8: SOLAR WILL LOOK UGLY/ MAKE MY HOME MORE DIFFICULT TO SELL
The opposite is quite literally true. Solar homes sell twice as fast and for a significantly higher premium than non solar homes. House builders and home flippers now include solar in with the build. Because the resale value of the home is greater than the effective cost of the solar power system, solar literally pays for itself in the resale of the home, and then some, on top of the savings against the monthly electricity bill. Also recent changes in Federal and State Law, for example House Bill 362 of the Texas State Legislature, make it ILLEGAL for any Homeowner’s Association to prevent a homeowner from going solar. The verdict is clear. Solar is no liability. It is an incredible ASSET when selling your home.
SOLAR MYTH 9: INSTALLING SOLAR PANELS WILL INCREASE MY PROPERTY TAX.
Fact: In many other states, solar installations are property-tax exempt. From an investment perspective, this means that installing solar panels increases the resale value of your house without costing you an extra dime in property taxes. The same cannot be said for other home investments such as swimming pools, a new deck, etc.
SOLAR MYTH 10: SOLAR PANELS REQUIRE A TRACKING SYSTEM TO FOLLOW THE ANGLE OF THE SUN.
Fact: Though tracking mechanisms can provide efficiency gains for your solar panel system, they typically do not increase efficiency enough to justify the additional expense and maintenance of moving parts in residential situations. More importantly, most homeowners don't have the additional space required for these systems.