The appraisal value of residential photovoltaic systems (PV) is looking bright. In the past, many appraisers typically did not assign any value to the existence of PV deployment on a residential home. The system would be listed as an “upgrade” rather than increase the appraisal value of the residence. A recent study by Berkeley Lab, sponsored by the Department of Energy, indicates there is a shift in the way appraisers are beginning to value homes with “green upgrades”.
The study released in December 2013, concluded that PV systems have value and their contribution to home value is significant. The study surveyed homes across California and found that premiums were correlated with PV system size and weakly correlated with PV system page. On average the study estimated that each 1-kW was equivalent to a $5,911 higher premium but each year the PV system aged resulted in a $2,411 lower premium. After federal tax credits, residential energy tax credits, and annual solar renewable energy certificates, an average PV system costs the homeowner $12,025 out of pocket and is only a five to seven-year return on investment.
Despite the study gathering data only in the California residential market, there is ample evidence that appraisals are beginning to assign significant value to PV systems across the country. Exactly one year ago the Appraisal Institute, the nation’s largest professional association of real estate appraisers, released a new tool to assist appraisers in establishing a uniform valuation of PV systems. The spreadsheet solved many past valuation dilemmas including: adoption rate in the market, condition, utility rates, and aesthetics. As markets begin to realize the potential and selling appeal of PV systems, so will the value and demand for green upgrades and energy efficiency. Now is a great time to take advantage of existing federal and state tax incentives and credits to install a PV system on your home.