Last week, LBNL announced completion of a new report entitled, “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California.”
An increasing number of homes with photovoltaic (PV) energy systems have sold in the U.S., yet relatively little research exists that estimates the impacts of those PV systems on home sales prices. A clearer understanding of these effects might influence the decisions of homeowners considering installing PV on their home or selling their home with PV already installed, of home buyers considering purchasing a home with PV already installed, and of new home builders considering installing PV on their production homes.
This research analyzes nearly 2,000 California homes that have sold with PV installed. Across a large number of model specifications and robustness tests, the analysis finds strong evidence that California homes with PV systems have sold for a premium over comparable homes without PV systems.
Specifically, some of the key findings from the analysis include:
- The average home sales price increases from PV across the full sample of homes in the dataset ranges from approximately $3.9 to $6.4 per installed watt (DC) of PV.
- Most models coalesce near an average effect of $5.5/watt, which corresponds to a home sales price premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the study).
- These average sales price premiums appear to be comparable to the investment that homeowners have made to install PV systems in California, and homeowners with PV also benefit from electricity cost savings after PV system installation and prior to home sale.
- When expressed as a ratio of the sales price premium to estimated annual electricity cost savings associated with PV, an average ratio of 14:1 to 22:1 can be calculated; these results are consistent with those of the more-extensive existing literature on the impact of energy efficiency on home sales prices.
- The analysis finds that sales price premiums decline as PV systems age.
- When the data are split between new and existing homes, a large disparity in premiums is discovered: the research finds that new homes with PV in California have demonstrated average premiums of $2.3-2.6/watt, while the average premium for existing homes with PV has been more than $6/watt.
- The research suggests several possible reasons for the lower premium for new homes, including that new home builders may also gain value from PV as a market differentiator, and may therefore have been willing to accept a lower premium in return for faster sales velocity.
The full report can be downloaded from: http://eetd.lbl.gov/ea/emp/reports/lbnl-4476e.pdf
A 2-page summary of the report’s key findings can be found at: http://eetd.lbl.gov/ea/emp/reports/lbnl-4476e-rs.pdf
Funding and support for this study came from the U.S. Department of Energy’s Solar Energy Technologies Program, the National Renewable Energy Laboratory, and the Clean Energy States Alliance.
Below is a press announcement distributed with the study.
Media contact: Allan Chen (510) 486-4210, firstname.lastname@example.org
Technical contacts: Ryan Wiser, (510) 486-5474, email@example.com, and Ben Hoen, (845) 758-1896, firstname.lastname@example.org
New Berkeley Lab Study Finds that Residential Solar Photovoltaic Systems Boost the Sales Price of California Homes
Berkeley, CA– New research by the U.S. Department of Energy’s (DOE) Lawrence Berkeley National Laboratory finds strong evidence that homes with solar photovoltaic (PV) systems sell for a premium over homes without solar systems.
“We find compelling evidence that solar PV systems in California have boosted home sales prices,” says Ben Hoen, the lead researcher on the study and a Principal Research Associate at Berkeley Lab. “These average sales price premiums appear to be comparable with the average investment that homeowners have made to install PV systems in California, and of course homeowners also benefit from energy bill savings after PV system installation and prior to home sale.”
The research finds that homes with PV in California have sold for a premium, expressed in dollars per watt of installed PV, of approximately $3.9 to $6.4/watt. This corresponds to an average home sales price premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the Berkeley Lab dataset), and compares to an average investment that homeowners have made to install PV systems in California of approximately $5/W over the 2001-2009 period.
“This is a sizable effect,” says co-author and Staff Scientist Ryan Wiser of Berkeley Lab. “This research might influence the decisions of homeowners considering installing a PV system and of home buyers considering buying a home with PV already installed. Even new home builders that are contemplating PV as a component of their homes can benefit from this research.”
Approximately 2,100 megawatts (MW) of grid-connected solar PV have been installed in the U.S. California has been and continues to be the country’s largest market for PV, with nearly 1,000 MW of installed capacity. California is also approaching 100,000 individual PV systems installed, more than 90% of which are residential. Though an increasing number of homes with PV systems have sold, relatively little research has been performed to estimate the impacts of those PV systems on home sales prices.
The Berkeley Lab research is the first to empirically explore the existence and magnitude of residential PV sales price impacts across a large number of homes and over a wide geographic area. The research analyzed a dataset of more than 72,000 California homes that sold from 2000 through mid-2009, approximately 2,000 of which had a PV system at the time of sale. “This is the most comprehensive and data-rich analysis to date of the potential influence of PV systems on home sales prices,” says co-author and San Diego State University Economics Department Chair Mark Thayer.
The research controlled for a large number of factors that might influence results, such as housing market fluctuations, neighborhood effects, the age of the home, and the size of the home and the parcel on which it was located. The resulting premiums associated with PV systems were consistent across a large number of model specifications and robustness tests.
The research also shows that, as PV systems age, the premium enjoyed at the time of home sale decreases. Additionally, existing homes with PV systems are found to have commanded a larger sales price premium than new homes with similarly sized PV systems.
“One reason for the disparity between existing and new homes with PV might be that new homebuilders also gain value from PV as a market differentiator that speeds the home sales process, a factor not analyzed in the Berkeley Lab study,” says co-author and Berkeley Lab Principle Scientific Engineering Associate Peter Cappers. “More research is warranted to better understand these and related impacts.”
This work was supported by the Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Program) of the U.S. Department of Energy, by the National Renewable Energy Laboratory, and by the Clean Energy States Alliance.
Lawrence Berkeley National Laboratory addresses the world’s most urgent scientific challenges by advancing sustainable energy, protecting human health, creating new materials, and revealing the origin and fate of the universe. Founded in 1931, Berkeley Lab’s scientific expertise has been recognized with 12 Nobel prizes. The University of California manages Berkeley Lab for the U.S. Department of Energy’s Office of Science. For more, visit www.lbl.gov.
For more information about DOE’s Solar Energy Technologies Program, see http://www1.eere.energy.gov/solar/
For more information about the National Renewable Energy Laboratory, see http://www.nrel.gov/
For more information about the Clean Energy States Alliance, see http://www.cleanenergystates.org/
For more information on the report, contact Ben Hoen (email@example.com, 845-758-1896) or Ryan Wiser (firstname.lastname@example.org, 510-486-5474).