UrbanTurf Reader Asks: What Effect Will Adding Solar Panels Have on the Value of My Home?

  • September 2nd 2010

by Mark Wellborn

In this week's installment of UrbanTurf Reader Asks, a reader wonders what the long-term benefits will be to adding solar panels to his roof. We asked Green DC Realty's Michael Kiefer to weigh in with his thoughts.

UrbanTurf Reader Asks: What Effect Will Adding Solar Panels Have on the Value of My Home?: Figure 1

I'm currently trying to figure out what the long-term benefits are to adding solar panels to my roof. DC offers a competitive grant that makes solar somewhat attractive, but the return on investment is still in the five to ten-year range. What does the addition of solar panels do to the value of the home? In DC, your property tax can not take into account solar panels, but I'm wondering if it causes a significant jump in value?

Answer: The value that adding solar panels to your home creates is two-fold – there is the overall year-to-year savings in your utility bills that is realized immediately and then there is the value it directly adds to the home if you plan on selling it.

The incentives offered by the Federal and DC Renewable Energy Grant Programs dramatically reduce the payback time on the investment needed to install solar panels. For the Mid-Atlantic region, a solar electric system will cost about $7 per watt and your typical DC home might accommodate around a 4-5kW system depending upon sun exposure and size (1,000 watts make a 1kW). Approximately 5kWh 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. A system of this size will run about $32,000, but this expense is reduced by about 40 percent with the incentives mentioned above.

Electricity use in homes has a lot to do with lifestyle patterns, but my detached bungalow averages about 750kWh on a 12-month annualized basis, so a 5kW system covers this use just fine.

As far as realized value, 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. The key is documenting all this through your utility bills over the course of time.

It is important to note that appraisers/underwriters are not very familiar with this information, so educating potential buyers when you are selling your home is critical to realizing your efforts.

If you would like to submit a question for UrbanTurf Reader Asks, send an email to editor2010@urbanturf.com.

This article originally published at https://dc.urbanturf.com/articles/blog/urbanturf_reader_asks_what_effect_will_adding_solar_panels_have_on_the_valu/2442.

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