Follow up on the Solar discussion from an Installer

[Spartacus]

Hello All!!
I am in Solar Sales and Installation. I found your forum while looking for information on appraisals of solar homes. I was surprised to find that some of the information was not entirely factual. I thought I would add a bit of information about solar and see if there was any general consensus about how homes might be appraised or if it changed anyone's mind or opinion.

I should say up front that I am in and do business in California (Los Angeles to be specific) which is has some of the highest electricity prices in the nation. Some of the information about electricity and pricing could vary for other states but the information about panels and warranties are standard.
There are 2 types of solar connection, on grid and off grid. On grid systems make up the vast majority of residential and business arrays. On grid systems do not incorporate batteries and are interconnected to the local electric company and can accept electricity from the solar array as well as supply energy to the house from the electric company. The amount of energy an array produces is taken away from the amount of energy the house uses over the billing cycle . If the house used less than was produced by the array the energy credits are rolled over to the next month which will help off set the energy used in the next month in case the house uses more than the array produces. This happens through out the entire year. As of 2011 if at the end of the year there is still a credit on the account the electric company will pay the homeowner the value of the Credit in cash (check) or the homeowner can elect to continue rolling that credit over into the next year.

The only service an on-grid system uses is to be washed off once or twice per year. There are no moving parts and they do not wear easily. Solar panels are GUARANTED to put out at least 90% of their rated levels through the first 10 years and 80% of their power through 25 years. The panels are estimated to last up to 50 years but loose power every year. Most single inverters are guaranteed for 10 years and micro inverters are guaranteed for 15 ( but they are rated for 25 years and are considering extending the warranty up to 25 to reflect the panel guarantee).

Solar panels can take basically any weather conditions. They are rated for 125 mph winds and can take golf ball size hail. A lightning strike would do damage, but not much else. A panel array protects the roof below it because it protects it from sunlight. When the roof needs to be replaced, the panels them selves can be lifted so the roof can be worked on below it (the entire system does not need to be removed to replace the roof).

Taking a solar system off the roof and moving it is like saying you like your granite counter tops and want to take them with you. It can be done, but not easily. A solar system must be installed by a licensed electrician (unless it is owner installed) and is imbedded in the house and electrical panel (this is especially true for houses with Tile roofing).

Electricity prices have been increasing at a rate of 6.5% per year for the last 30 years. DWP announced they expected to increase prices 8% per year for the next 5 years then between 5 and 7% per year after that (due to the new climate control regulations here in Cali) and SCE is expected to follow. A residential bill that is currently at $218.00 per month (11,782kWh/yr) I can install for roughly $20k after rebates (given the optimal conditions) and ensure the client has a $0 bill (possibly even a check back from the electric company). Over the course of 25 years assuming an average increase of 5% instead of the numbers stated above (just to be conservative) the home owner would avoid $149,446 (yes, this takes into account the degradation of the panels and the inverter replacement at 15 years (just to be conservative). If a homeowner includes the price of the system in their 30 year loan at 5% interest rate it would equate to approximately $114 per month. This means an immediate savings of $104 per month for the homeowner without ever having a price increase in electricity again (given that they don’t increase their usage).

Please y’all … given that all this information is correct, why shouldn’t the appraisal come out higher than a home without solar?

BTW … I believe the new California law states that all new homes sold must include solar as an option for the buyer so we should start seeing more comps. In addition, studies have shown that when a builder gives the option of solar, the homes sell faster and for more money.

I look forward to your responses and am happy to answer any questions.

 

[Randolph Kinney]

Please y’all … given that all this information is correct, why shouldn’t the appraisal come out higher than a home without solar?

Show us your paired sales, how much more?

 

[Mountain Man]

I can see where in CA your sales would be great, the great state of Gobment regulation. But in GA where the climate is mild and government unions have not hijacked the power companies, on grid power is cheap. The market will not pay for a solar system that cost more than the standard cost of hooking up to our local coop. Hell, for that matter we are a mer couple hundred miles north of the biggest gas (LP and Petrol) importing port for the southeast. In the dead of winter I can buy LP for a generator much less than cost of an "alternative" power system. Location, location, location. :icon_wink:

 

[Eric C]

In addition, studies have shown that when a builder gives the option of solar, the homes sell faster and for more money.

.

Provide those "studies" including specific properties with and without solar to the appraiser and he'll tell you if theres a difference in market value or not.

What about properties with 'purified' water even in the toilet? should those sell for more than those without purified water?

 

[Frederick]

Simply; They look ugly.

People move frequently.

Hey kids, we can put in an inground pool or put solar panels on the roof. What do you say?

They aren't sexy. They are a geeky neighbor thing. You know, that guy with the rotating compost bin in the yard and the water barrels collecting his rainwater from the gutters. There is the abandoned 8 foot satellite dish in the corner of his yard next to his organic garden. He chases tornadoes on the weekend, vacations at the Kennedy Space Center and collects Star Trek memorabilia. He's on the waiting list for a Chevy Volt.

When metal and vinyl siding came out suburbia was transformed. The tin benders would work their way down the street. There was a measureable market reaction to maintenance-free exteriors when that was the "new big thing".

A lot of us remember the 1970s and early 1980s when solar panels first started to show up and we heard all the promises of savings. I saw a few go up and a few years later they looked like insulated windows with a bad gasket and people got rid of them. On a roof they were as aesthetically pleasing to look at as a guy with a bleeding gash in his head. They came along about the same time as people began super insulation houses until the "sick building syndrome" news articles started appearing and freaked people out.

Integrate it into normal looking siding and roofing material at a slight premium and you might have something. Right now its akin to one of those hats with the two cups and tubing.....seems practical but strange.

 

[Vermonter]

Please y’all … given that all this information is correct, why shouldn’t the appraisal come out higher than a home without solar?

So you're saying your figures are accurate for all different systems, panels, inverters, installation providers and areas of the country?

Sorry, but I have a local solar company giving me entirely different reliability and performance numbers and nowhere near as optimistic as yours.

 

[Randolph Kinney]

The OP has a bias. There are many articles written about solar electric. They have one common point; the systems are just too expensive and with out tax credits and subsidies, they don't pencil out.

Having a solar system installed, will a home sell for more than with out one? The jury is still out. For sure, there is no data to even suggest that the cost of the system can be significantly covered on the resell of the home. The cost has to be recovered through the operating savings and that typically takes longer than most people will live in the home.

 

[Scott R Marshall]

Spartacus,


I will tell you what I have found. There is a buyer that will pay a premium for a brand new house with a solar system installed. There is also a homeowner that will pay a premium to have one installed on their home after it is built, which comprises a smaller percentage of the solar market. There is almost no market for someone to pay that premium on resale.

Why is that the case? At this point I do not know. My general thoughts are that the typical buyer who really wants this feature also wants total control in the installation and the overall efficiency of the system and is less inclined to buy the home after the fact. There may also be some obsolescence issues inherent as the technology is still evolving and advancing and the typical buyer for this system wants something cutting edge and is not concerned in buying the 5 year old system. I will also tell you that if it were really and truly beneficial and that the total upfront costs were greatly outweighed by the potential savings, everyone would have one.

 

[nstanbru]

I agree with Randolph that the jury is still out. Using the OP's savings figure of $104/mo after financing approx. $20K (after credits) it would take the home owner roughly 16 years just to recoup the cost which means "real" savings don't start until then. Further, we're talking about future dollars with no discounting to present worth. A buyer may consider paying more for a home with solar based on the potential savings in monthly bills. The amount, IMO, would depend on the age of the system at time of purchase and the resultant savings coupled with a reasaonable discount because the savings are future dollars. Also, IMO, the cost in the form of interest on the additional loan amount, should be considered. This brings us back to the original point by Randolph that the jury is still out as to how much, if any, a buyer is willing to pay for a home with solar. To me, if a buyer just applies a little common sense, they won't make their decision based solely on additional cash flow because of the savings on electricity.

 

[CANative]

Agree with nstanbru. Would the typical homebuyer pre-pay the local utility for 25 years of electrical service if they could get it at a discount but then had to pay interest on it? I doubt it.

There is a time value to money. Money now is better than money later.