Solar energy is an investment that pays for itself as the upfront cost is paid back by the reduction in the energy bills and the customer may see a return of a minimum of 2-3 times the initial investment he made during the lifespan of the solar system. But that only happens if you stay in the same house for the entire time of the warranty. But, practically, this hardly happens. You move and need to sell your house. In such cases, the question crops up that whether the initial investment will be recovered?
If you own the house, the problem is solved as the grid-tied solar system will increase the property value of your home. And even if you do not stay in your home long enough to break even the upfront costs, the extra you get from home buyers who are eager to move into your solar-ready home will more than cover up your investment.
What is the average premium that solar homes get at the time of selling?
According to a study conducted across 6 states on the sale price of 22,822 homes, the sale value of 3951 PV homes was compared to that of 18871 non-PV homes. The study says that the home value is increased by $14,329, or 3.74% more for PV homes on an average as compared to the non-PV ones.
The average cost of materials is $10,000 – $18,000 and the home owners are able to get the same back when they sell their homes. This is what they get in addition to the savings they made on the tax incentives and reduced energy bills which probably has paid 2-3 times for the system over the life warranty.
But there are some states which do not count PV systems towards the home value when calculating property taxes. This depends on local regulations and is not the same everywhere in the US.
Now let us delve into this in details
Real estate is a very complicated market and there are innumerable factors that influence the value of a property. Let us take into consideration the following issues :
Reducing Returns on Larger PV Systems
Homes which are solar-equipped sell at a significant premium irrespective of the output wattage of the system. But that does not mean that the sale price of homes with stronger PV systems will increase in proportion with the installation expense of the system.
Homebuyers are ready to shell out some more for owning a ‘solar home,’ irrespective of the efficacy of the system or the capacity to entirely cover their expected energy usage. They will pay a bit more for the larger systems but not proportionally to the worth of the system.
So those who intend to sell, it would be sensible to install a modest grid tie system which depends on stored solar energy most of the year, but pulls from the grid at times of heavier needs. This offers a flexibility of marketing your solar home in the listing while keeping the cost of installation down and making a profit when the sale occurs.
Selling Solar Homes May be a Longer Process
According to study, solar-equipped homes may take a longer time to sell than the non-PV homes and this extra time is roughly 8 days. This data changes from state to state depending on a few factors like –
Small Sample Size in certain States
The data from CA is way more robust than that from other states which is why its numbers come closest to the national average.
- Variable Incentive depending on StateSome states offer stronger incentives if you buy a solar home. Again there are others which offer no incentive. If there is no incentive, then the solar homes will stay longer in the buying list.
- Local Perception of SolarSolar power has received wider acceptance in areas like FL and CA as there is a lot of sunshine there and huge benefits are given for going solar. But this topic has not received so much education and adoption from other states.
If the locality has poor benefits for solar adoption and lower electricity costs, there will be less awareness among the people regarding solar as an alternative energy resource. Consequently, buyers will hesitate to buy a solar-powered home as they are not convinced about its reliability. Also they may not realize the long-term benefits of selling a solar-powered home.
In states where solar education is low, people may not understand the difference between off-grid and grid-tied systems. They usually think that such systems are all off-grid which depend on panels to produce 100% of the energy and run totally on a battery storage system. They think that they will remain without power if the solar array goes out and they do not know how to fix it.
Actually, most systems are grid-tied and generate their own energy but remain hooked to the public utility grid. The panels are not required to produce 100% of the electricity of your home. The grid can chip in at times of heavy usage. And at times of power outage, the public utility workers fix the problems and get things running smooth as quick as possible.
In areas where solar energy is not popular, the buyers have to be educated a little so that they get convinced to buy the solar-powered home.
Is The System New Or Old?
Newer PV systems are made from more efficient materials, are less likely to need replacement of parts and have more years of warranty left. With the aging of the PV systems, their value falls and these become less valuable when they are put in the home market for sale. So newer installations are always a bigger boon for property values as is to be expected.
Which is better – Leased or Owned systems?
The premium is only applicable to those homes which have host-owned PV systems. If you had agreed to a solar lease or PPA (Power Purchasing Agreement) with the developer who had installed the system you are not likely to see the higher sale price coming to you as profits. In such situations, the buyers will ask the previous owners to pay off their lease or PPA agreement which will offset the extra value built into the final sale price of the home.
So you get the extra cash on selling the property only if you have bought the PV system outright.
Anyways, solar is a good investment. If you stay in your home for the warranty duration, the grid tie system is going to pay 2-3 times or may be even more in energy savings and tax breaks.
But even if you think about moving before the warranty period is completed, the value of the system converts into a bigger sale price when you put up your home for sale in the market. And this value will be enough to cover the hardware costs. Thus the homeowners break even right at the beginning of their solar investment.