How much are solar panels worth?
For many years it's been clear that homes with solar have added value for buyers. But it wasn't until very recently that appraisers had a way to calculate that value. We installed solar on our roof in November of 2010 and have not paid any utility bill since March of 2011. Additionally, we get approximately $600 back from the utility company each year for Renewable Energy Credits. We even charge our electric car and have paid $0.
What's the ROI on a net-zero home?
How much would free energy for life, plus $600 cash back each year, plus free fuel for our car be worth? Several years ago we had two separate home appraisals. Both appraisers gave us a grand total of $0 added value for the sale of our home. Really? Really. Consider that at the average Michigan homeowner spends about $2,800 annually on energy for the home. Without factoring inflation, over a 30 year mortgage term plus the value of the renewable energy credits and car charging, the solar panels would save us over $100,000. The real value is somewhere between $0 and $100,000. But it's certainly greater than zero.
The U.S. Department of Energy has created a tool to help appraisers calculate a more realistic value for residential home solar. The tool, called PV Value, uses the Uniform Standards of Progressional Appraisal Practice protocol and has been endorsed by the Appraisal Institute. You can also check out the Appraisal Institute's report on how solar adds value to homes.
How to calculate the ROI on your solar panels
You can try the easy-to-use PV Value tool for your home. First, you enter your home address. A satellite map of your rooftop and your longitude and latitude appear on the form. Next, you enter whether you have a system, are planning a system, or are currently constructing a system. It will then ask whether you are owning or leasing the system, which will impact total value.
The PV Value tool will then ask several detailed questions about the age, size, power, and angle of your array. If you don't already own a system, you can look up manufacturer specs to answer these questions or talk with a local solar contractor. After determining the discount rate and your local utility rate, the tool comes back with a PV Value.
What we determined our home was worth
After entering data for my home, PV Value calculated a high, average, and low range of rates. Here's how mine turned out for our 8kW solar array:
High Value: $21,413
Average Value: $19.556
Low Value: $17,907
Not bad! We are planning to have another appraisal soon and we'll see how much new appraisers will rely on this tool. Assuming our array is worth the low calculated value of $17,907, then this is simply the most valuable home improvement project you can make. Nothing else compares. Consider that a $60,000 major kitchen remodel could raise your home's resale value by less than $40,000. That's a loss of 33%. Our solar array cost $15,900 after incentives and we have free, clean energy for life. You do the math.