You don’t have to look far in Central Virginia these days to find a home with solar panels on the roof. The plummeting price of panels has coincided with a plethora of financing options and a growing awareness of climate change and clean energy solutions, making the economic and environmental case for solar a win-win for many homeowners.
It Might Work for Your Roof, But What About Your Wallet?
Once you’ve gauged whether your roof is optimal for solar power, the next big question is whether it’s a smart investment for you financially. Panels will certainly pay for themselves over time and put money back in your pocket with lower energy bills, but what’s their impact on the value of your home?
First, two important things to know if you’re considering solar for your Virginia home. “Net metering” is a billing mechanism that credits solar panel owners for the electricity they add to the grid. In Virginia, you’re not allowed to make a profit off the utility but you can potentially zero-out your monthly utility bills. And in the Commonwealth, you own the panels instead of leasing, which reduces complications at the time of sale with potential buyers.
Short- and Long-Term Value
And solar panels can certainly be a value-add for home’s listing. There are plenty of recent studies, including one from Lawrence Berkeley National Lab, that show that homes with solar do sell for more. But that doesn’t necessarily mean the seller will see the full purchase price for the panels come back to them in the sale price.
How much value they add depends on: a. the market (do buyers value solar in our market – generally speaking, yes they do!); b. the home/neighborhood (higher end homes tend to get more added value from their solar installations); and c. how much the homeowner paid for the panels. For example, it may be unrealistic to expect that a $40K solar installation on a $340K home will bring $40K in additional value. The Appraisal Institute recently published An Analysis of Solar Home Paired Sales across Six States that shows that homes with solar do command a price premium on average of $14,329 (which equates to 3.74% of the average sale price and $3.78 per watt).
Making Sure Your Appraiser Sees the Light
If you’re already working with an appraiser, make sure they know about the PV Value calculator developed by the US Department of Energy Sunshot Program and Sandia Labs. It’s free and online. According to the DOE, “Valuing a PV system is done using an income capitalization approach, which considers the present value of projected future energy production along with estimated operating and maintenance costs that are anticipated to occur during the PV module power production warranty timeframe.”
But perhaps the most important tool for appraisers, real estate agents and sellers for capturing solar’s value is the Appraisal Institute’s Green and Energy Efficient Addendum, which collects information on solar panel features. Appraisers can use it to input data to run the PV Value calculator. Pearl Certification is licensed to complete this important addendum on behalf of sellers, and the firm works with solar installers and homeowners to verify and register proper documentation used at the time of sale to calculate additional home value.
If you aren’t working with a company like Pearl, make sure your listing agent has a disclosure package for prospective buyers. That could be a one-pager overview of your solar panel system that highlights its features: age, warranty, power output, utility savings, installer, and age of roof (no one wants to replace one with panels on it). Lastly, make sure solar is included in your MLS listing; the Charlottesville Area Association of Realtors recently added this field.
This article first appeared in the Daily Progress.