Study finds solar power systems increase market value of homes

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Findings from a team of real estate appraisal experts and a researcher at the Lawrence Berkeley National Laboratory suggest that adding a photovoltaic solar power system to a home increases the home’s value across six states.

The market value of photovoltaic systems, or PV systems, has been unclear, leaving appraisers, homeowners and developers in the dark about whether they would increase home value. PV systems produce electricity from sunlight using semiconductor materials.

The study brought together a team of seven appraisal experts and Ben Hoen, a staff research associate at the Berkeley Lab and co-author of the report. The team observed that PV systems increase the market value of a home in markets in California, Oregon, Florida, Maryland, North Carolina and Pennsylvania. The study found that the premium is generally consistent across a state’s markets and that the premium is close to the net cost of the system.

For scientists and other researchers in the field, the study provides a “great snapshot in time” of the current PV market, Hoen said. He noted that in the past, it has been difficult to assign a value to a home’s PV system because appraisers could not find comparable home sales to assign a specific premium. Hoen said that this study gives appraisers more credence and confidence to estimate the PV system’s market value.

Additionally, this study used unique methodologies to calculate the premiums. Although the hedonic approach — another appraisal model — is typically used by academics, the team also used paired sales analysis to determine the premiums. The results of both approaches were close in number, which Hoen described as a major breakthrough of the study. The study also employed the cost and income approaches as well, which are not commonly used in conjunction.

“A one-size-fits-all value is an inappropriate way to discuss the premiums,” Hoen said. Rather, he said, it is more important to look at the system, its age and the underlying market.

But Sandra Adomatis, an SRA and LEED Green associate who co-authored the study, cautioned against a comparison between premiums in 2015 and those in the study because today’s systems are cheaper than the systems in the study, which were primarily from 2010-13.

Dan Kammen, campus professor and member of the campus Energy and Resources Group in the Goldman School of Public Policy, said the results of the study were echoed by previous results at UCLA, the National Renewable Energy Laboratory and in his own laboratory.

The study would only be surprising if the addition of “solar (panels) did not significantly increase home value”, he said in an email.

Hoen said he hopes that this study will “encourage others to do this kind of thing in other markets, with other data sets or more recent data sets.”

Contact Daniella Wenger at [email protected].