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Solar panels - PV Value estimated energy value

Jaketnt

Sophomore Member
Joined
Nov 7, 2008
Professional Status
Certified Residential Appraiser
State
California
I did a search in the forum for solar panels estimated energy value or PV Value calculations but couldn't find what I was looking.
Is anyone using www.pvvalue.com and the homeowner's solar specs (kW, Tilt/Pitch, Azimuth, etc) to calculate the accumulated value of the panels over say a life of 25 years?
Been doing it for a while and the estimated value has always been a fraction of the total cost paid for the installation of the panels, but seems like recently the accumulated energy value is even less
(20%+/- of the installation cost). I'm curious to see what sort of relation you're finding between the total accumulated energy value estimate vs the cost to install the panels. Thx!
 
The question you need to ask is what are buyer's for that home, in that neighborhood paying for owned solar? If they are willing to pay some amount, how old is the system and how does that impact the market value of the panels. In reality fewer and fewer listings mention them and if they do its only to let a potential buyer know if they are expected to take over the lease
 
If you are in California, the value of net metering has taken several significant blows lately, and I would expect those to impact any perceived or realized value in solar panel installations. I would not rely solely on PVValue for adjustments.
 
It always boils down to what the current market supports for owned solar panels. Green energy certifications, PV value have less credibility than paired sales analysis.
 
PV value have less credibility than paired sales analysis.
True, but in the absence of support from paired sales, then PV estimate is a supported estimate of the impact. No one can prove it wrong if there are no nearby paired sales, and of course, the problem with paired sales in finding a true model match with making any number of unsupported assumptions about other items different between the two "pairs" and a single "pair" to me is basically no support at all.
 
If an appraiser doesn't understand how a discounted cash flow works then they shouldn't be using a DCF application. Virtually none of these SFR buyers or sellers or brokers or even the sales reps understand what they're doing with them.

I took a 21hr Green Appraiser course a couple years back and while there was a ton of useful material in the course the CR appraiser didn't know he was doing with the PV calulation app. I was literally the only appraiser in the room with any experience with how the appraiser is supposed to perform a DCF analysis , and I don't even appraise SFRs for the GSE pipelines.

Pro-tip: If you can extract the adjustment from sales data in the market then it doesn't matter what conflicting result the app returns. Or, if you insist on using the app anyway then you should be using the adjustments from the sales data to tweak the model. Those rates of return don't just create themselves and they also don't developed from a list.

The average difference upon resale varies by region, town and even among the neighborhoods. That alone should clue you in to how this calculator should be used.

Cost does not equal value
Savings does not equal value
 
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Just adding my opinion - the reason solar panels are not more popular is because the high upfront cost negates the savings for the next 18 years, with only the last 7 years (out of a 25-year life ) real return. And who plans to stay in a house 25 years?

If it costs 20k to put in a solar system and it saves $100 a month in utility bill, it is not until 18th year of living there ( aprox ) that it breaks even. That is real people math and how an avg buyer might see it. You are prepaying your own electrical bill for 18 years. While some thrifty and environmentally conscious buyers might go for it, others might want that 20 k to pay for a pool or upgrade (or to spend in Vegas, who knows)

If the solar federal price credits go away, expect fewer to be sold new, which might increase the value of the systems already in place to the buyers who value it.

As far as formulas, the solar sales people use it to convince people to buy the solar as a stand alone system which is a whole different thing then contributory value of a solar system to the whole of the property ( market value - what the property should bring in a transaction - not what the savings are or what justifies new purchase of a stand alone X feature )
 
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Just adding my opinion - the reason solar panels are not more popular is because the high upfront cost negates the savings for the next 18 years, with only the last 7 years (out of a 25-year life ) real return. And who plans to stay in a house 25 years?

If it costs 20k to put in a solar system and it saves $100 a month in utility bill, it is not until 18th year of living there ( aprox ) that it breaks even. That is real people math and how an avg buyer might see it. You are prepaying your own electrical bill for 18 years. While some thrifty and environmentally conscious buyers might go for it, others might want that 20 k to pay for a pool or upgrade (or to spend in Vegas, who knows)

If the solar federal price credits go away, expect fewer to be sold new, which might increase the value of the systems already in place to the buyers who value it.

As far as formulas, the solar sales people use it to convince people to buy the solar as a stand alone system which is a whole different thing then contributory value of a solar system to the whole of the property ( market value - what the property should bring in a transaction - not what the savings are or what justifies new purchase of a stand alone X feature )
I haven't seen a solar panel package below $60K yet. Three double wides had $68-72,000 in solar panels and still had electric bills.
 
True, but in the absence of support from paired sales, then PV estimate is a supported estimate of the impact. No one can prove it wrong if there are no nearby paired sales, and of course, the problem with paired sales in finding a true model match with making any number of unsupported assumptions about other items different between the two "pairs" and a single "pair" to me is basically no support at all.
Sometimes the paired sales analysis is not derived from the subject property, but from another property(ies) with owned solar panels and paired sales without owned solar panels. If the surrounding subdivisions show a 5-7% increase in value that is what the market bears.
 
The average difference upon resale varies by region, town and even among the neighborhoods. That alone should clue you in to how this calculator should be used.

Cost does not equal value
Savings does not equal value
Absent market data for matched pair analysis, a DCF of the estimated savings over the estimated life of the panels (what is that, 20 yrs maybe) using a reasonable cap rate would be a credible basis for an adjustment, IMO.

Simple DCF: PV of $150/month savings over 20 yrs at 10% cap rate = approx. $15,000. 10% is probably too low and no ongoing maintenance or repair costs are included. But neither are tax incentives. $60K+ investment, $15,000 return. I can see some greenies getting a warm fuzzy feeling but for people that think with their brains instead of their hearts, this doesn't seem to be a good investment.
 
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