Saturday, December 14, 2013

Does Solar Increase your Home's Sale Price?

Lawrence Berkeley Lab asks the question, but then ignores a key element!  See this story in today's Chron for details--

According to LBL, solar generates about $6,000 in added value at sale per kilowatt of production capacity (most houses generate between 2 and 5 kW they say; we generate 2.6 kW).  Of course you might generate that capacity on the roof of a $400,000 home, or on the roof of a $4 million home.  But the analysis ignores the ongoing savings resulting from the installation itself--in our case a promised $115/mo in electric bill savings, which has turned out to be about $300/mo in practice [perhaps due to more drought/more sun this year compared to most].

My biz school background says you need to reflect the installation charge, capitalize the value of those savings, and add them to the net present value of the incrementally higher sale price in the future.

It drives me nuts that so many analysts of, for instance, double-paned windows, look only at utility bill savings, but ignore incremental sales price premiums while others look at the sales price premium and ignore the utility savings.  The former tend to be environmentalists and the latter tend to be contractors.

Start talking to each other guys!

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