Solar impact

[Scott.A]

I have an appraisal of a light industrial building that just installed a $283,000 solar array last year. Finding comps with solar arrays just ain't happening. Finding anything that has sold in northern IL with a solar array has become very frustrating.

So what recommendations do you have for estimating contributory value for a solar array when there's so little market info out there?

 

[Tom D]

Being just resi, wouldn't you go to other states for comps, or find some data literature on the web. And now that djt has killed climate funding, will there be any new data in the future.

 

[Gobears81]

You can do a DCF of the utility savings. The solar company most likely provided data showing utility savings to determine a payback analysis for the property owner. Panels aren't as effective over time and the utility savings forecast should reflect this. That contributory value would be added to the value derived by the other approaches.

 

[alebrewer]

You can do a DCF of the utility savings. The solar company most likely provided data showing utility savings to determine a payback analysis for the property owner. Panels aren't as effective over time and the utility savings forecast should reflect this. That contributory value would be added to the value derived by the other approaches.

Its interesting that the GSE's won't allow this as a standalone approach to estimating contributory value, when in fact - that's exactly what the market would do.

Realtor: How much additional value does solar add?
Market Participant: That depends on how much money it saves me each month...

 

[Gobears81]

Its interesting that the GSE's won't allow this as a standalone approach to estimating contributory value, when in fact - that's exactly what the market would do.

Realtor: How much additional value does solar add?
Market Participant: That depends on how much money it saves me each month...

I haven't taken this course, but it specifically indicates using DCF and is for all property types. Not all PV systems are created equal, so if a GSE indicated that this couldn't be done, it is probably because they don't know how to do a DCF

Residential and Commercial Valuation of Solar

The number of solar photovoltaic (PV) system installations continues to increase as the price becomes more feasible in many markets. Appraisers will find the valuation a challenge without knowledge of the technology and data available to use the most appropriate methodology. Appraisers must...

www.appraisalinstitute.org

 

[The Bob]

Its interesting that the GSE's won't allow this as a standalone approach to estimating contributory value, when in fact - that's exactly what the market would do.

Realtor: How much additional value does solar add?
Market Participant: That depends on how much money it saves me each month...

Maybe because they want "market value"....what kind of premium are buyers paying for that savings.

Appraisers must compare energy-efficient features of the subject property to those of comparable properties in the Sales Comparison Approach adjustment grid. Appraisers may augment the Sales Comparison Approach in evaluating any impact(either positive or negative) to the value of energy efficiency improvements with either the income or cost approach; however, appraiser's cannot adjust the value of the property
• on a mechanical dollar-for-dollar basis based on equipment and installation cost, or the discounted present value of expected cost savings of the equipment over the useful life of the equipment; or
• solely based on the cost or income approach. The appraiser must also analyze the market reaction to the energy efficient feature.

How many threads do we have to see wondering how to value something that everyone assumes has value, when the market data says... maybe not.

 

[alebrewer]

Yeah, I think their concern early on was that, like the new market analysis requirements, appraisers wouldn't understand the math behind some of the 'savings calculators' being touted by the Solar proponents. Problem is that is potentially inconsistent with how a market participant would value them. He/she is going to find a 'savings calculator' online and base their decision on the estimated monthly savings - even if they don't know how to do a formal DCF.

 

[alebrewer]

Maybe because they want "market value"....what kind of premium are buyers paying for that savings.

Appraisers must compare energy-efficient features of the subject property to those of comparable properties in the Sales Comparison Approach adjustment grid. Appraisers may augment the Sales Comparison Approach in evaluating any impact(either positive or negative) to the value of energy efficiency improvements with either the income or cost approach; however, appraiser's cannot adjust the value of the property
• on a mechanical dollar-for-dollar basis based on equipment and installation cost, or the discounted present value of expected cost savings of the equipment over the useful life of the equipment; or
• solely based on the cost or income approach. The appraiser must also analyze the market reaction to the energy efficient feature.

How many threads do we have to see wondering how to value something that everyone assumes has value, when the market data says... maybe not.

Thank you for the assistance. I hadn't thought of doing it that way. Brilliant.

 

[Gobears81]

Maybe because they want "market value"....what kind of premium are buyers paying for that savings.

Does a DCF (or a cost approach analysis) not reflect market value?

 

[The Bob]

Thank you for the assistance. I hadn't thought of doing it that way. Brilliant.

So what I highlighted in your post is BS?