December 18, 2014

How Do Solar Panels Impact Home Value?

I've looked at solar panels on and off and still haven't pulled the trigger to buy them.   When I've evaluated the benefit in the past I've not placed any value in the panels themselves.  I figured they were just going to be used up and depreciate in value until they are broken and thrown away in 20 or more years.   But that is actually ignoring some good value in panels.   Solar panels should increase the value of a home.   I mean if you're looking at two identical homes and one has a solar panel on it then I'd certainly pay more for the house with the panels. 

If I assume a panel will save you $1 in electricity over 20 years then I would calculate the net present value of that at about $18.36.   I could then add that value to the value of the house.  If the panels are older and maybe only have say 10 years left in their life then I'd cut the value in half.

I found a couple sources giving what they say the added value is : said:

"The National Renewable Energy Laboratory* offers a useful guide when determining how much your property’s value will go up. According to its research, each additional $1 in energy bill savings (from your solar installation) adds $20 to your home’s total value." 
*They had a link to the study but that link is now dead.

An NY Times article from 2011 said:
"The premium ranged from $3.90 to $6.40 per watt of capacity, but tended most often to be about $5.50 per watt."

 Those are different measures.  One is looking at savings to your energy bill and the other is looking at Watts capacity for the panels.   How do they relate?    You'd have to look the amount of sun you get locally to figure that.   In my area I figure roughly that one W of capacity gives me about 30¢ a year in electricity savings.   Of course it will be more or less depending on how much sun you get.

But if I do the math then the NYT source is saying that most often the value is $5.5 per watt.   If one W saves you $0.30 in electricity then that relates to valuing $1 of electricity savings at about $18.33.   Almost exactly the same as my $18.36 NPV guess. 

I think the right way is to determine the energy savings and then figure what thats worth.

Personally I think those estimates are a bit high.   Or at least they seem to really be only looking at brand new panels.   I can see spending that kind of money for a brand new panel but not an older one.

Note that I'm only talking about panels you own outright.   An NPR article pointed out that leased panels can be a negative.   People don't understand the leased system and you don't actually own those panels.  



  1. Excellent information and interesting to know about the solar panels

  2. Nice to hear about the details of solar panels and it is very interesting


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