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Solar Panels And How They Affect the Value of Your Home

by UrbanTurf Staff

Solar Panels And How They Affect the Value of Your Home: Figure 1

The New York Times recently published an article about an analysis by researchers at the Lawrence Berkeley National Laboratory that compared the sales prices of California homes sold with photovoltaic (PV) systems versus those without. The report found “strong evidence that California homes with PV systems sold for a premium over comparable homes without PV systems” between 2001 and 2009.

As UrbanTurf has reported in previous articles, the value of adding solar panels to your home is two-fold – there is the overall year-to-year savings in your utility bills and then there is the value the panels add to the home if you plan on selling it (although the latter is a point of debate as solar panel systems have a finite life). What makes solar panel installation particularly attractive are the incentives offered by the Federal and DC Renewable Energy Grant Programs that reduce the payback time on the initial investment.

Solar Panels And How They Affect the Value of Your Home: Figure 2
Grid tied photovoltaic system on the roof of 1824 R Street NW

Green DC Realty’s Mike Kiefer explained that, for the Mid-Atlantic region, a solar electric system will cost about $7 per watt and the typical DC home might accommodate around a 4-5 kilowatt system depending upon sun exposure and size (1,000 watts make 1kW). Approximately 5kWh (kilowatt-hours) of energy will be produced each day for each kW of panel installation which means on a monthly basis you can expect around 600-750 kWh of energy produced from a 4 or 5kW system. The calculation most commonly used these days is for every dollar you save in electricity use it adds about $20 in value to the home. So, $1,000 saved annually via solar panels translates to about $20,000 in additional property value.

In September of last year, UrbanTurf reader Matt Latham laid out the cost structure for the his 2.6 kW solar roof system. Below are the calculations:

  • Total Cost: $20,000
  • Fed Credit: $6,000
  • DC Grant: $8,500
  • Net System Cost: $5,500
  • 20 Year Internal Rate of Return: 18%
  • Payback: 4 years
  • Additional improvement value: $8,500

Happy Earth Day!

See other articles related to: solar power

This article originally published at http://dc.urbanturf.com/articles/blog/solar_panels_affect_the_value_of_your_home/3368

6 Comments

  1. Brad said at 5:07 pm on Friday April 22, 2011:
    What about the aesthetic value of the home? Wouldn't it generally make a home less aesthetically pleasing, reducing the value?
  1. H Street Landlord said at 5:37 pm on Friday April 22, 2011:
    I find it makes a home much more visually appealing.
  1. JR said at 6:18 pm on Friday April 22, 2011:
    @ At Brad, if you look carefully at the roofline of this 15 million dollar manse in Dupont Circle, you'll see the edges of the photovoltaic panels that cover the roof. If they can do it on that house in a historic district without compromising the architectural integrity, then they can do it almost anywhere. See the photo ar: http://dc.urbanturf.com/listings/property/1824_R_Street_NW/425
  1. Kristin said at 6:51 pm on Friday April 22, 2011:
    Very interesting. I'm wondering if they offer grants in VA as well? Any other incentives for VA homeowners?
  1. Kim Toufectis said at 10:06 pm on Friday April 22, 2011:
    As a prospective solar home owner, I HOPE that a PV system adds to the value of my Lincoln Park townhouse, but I'm not confident enough to count on it. Here's why. First, the system covers my (fairly new) roof. When I get ready to sell in a decade, that roof will be approaching the end of its life; I've complicated the re-roofing process for my buyer. Second, the system will age. 20 times the energy savings is a moving target as panel performance degrades over time (though this factor may well be offset by energy inflation). Third, technology advances over time. My system will use all the workable space for such a system (discounting areas that would be visible from the street in our historic district). So if my buyer wants a newer, higher-performing system I've just put obstacles in his/her path. Again, I hope that buyers would value my PV investment, I'm just not counting on it...
  1. Russ said at 6:09 pm on Tuesday April 26, 2011:
    @ Kristin, Check out www.dsireusa.org for information about grants, tax rebates, and other incentives offered in every states for renewables.

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