Solar Panels

[hastalavista]

Consideration of the removal of the system makes good sense especially when the remaining economic life is less than or close to the holding period. I am going to incorporate that into my analysis going forward.

 

[Meandering]

I appreciate you sharing your analysis and thought process with us.



Thank you Denis.

 

[hastalavista]

So we totally kiss and make-up....
I appreciate the critique; your suggestions improve the analysis, so it is I who owe you thanks.

And, that is a significant benefit of sharing different perspectives and approaches on this forum. Some things are black and white (USPAP... and even then not so B&W!), but most things are not so crystal clear. One of my character flaws is that I can become so comfortable in my own methods that my comfort level makes me slow to consider alternatives. Sharing my methods on the forum forces me to examine them and, usually, provides insights on how to improve them (once I get over my intransigence! ).

 

[Meandering]

And that's why I respect you.



It's not about fighting over who's right and who's wrong, but rather it is about considering other, or opposing ideas and weighting them against the data and outcomes, instead of against our own ideas and egos.

Thank you.

.

 

[Meandering]

Actually, one other thought here.

The shingles of the roof would also need to be replaced, having laid in the shade of solar panels for 20 years, accumulating moisture in the shade. If we are looking at the reduced costs of operating a house with 10 year old solar panels, we should also consider the costs will go up to cover shingle replacement as well as removal and disposal and removal of the exterior electric supply lines from where the panels were.

and,
there remains a question, for me at least, that when the solar panels are removed, what does it cost to have the solar meter removed from the house electric meter? Maybe only a couple of hundred, but who do you call to do that if the solar company is no longer in business? An every day electrician, or the local utility company?

 

[hastalavista]

Actually, one other thought here.

The shingles of the roof would also need to be replaced, having laid in the shade of solar panels for 20 years, accumulating moisture in the shade. If we are looking at the reduced costs of operating a house with 10 year old solar panels, we should also consider the costs will go up to cover shingle replacement as well as removal and disposal and removal of the exterior electric supply lines from where the panels were.

and,
there remains a question, for me at least, that when the solar panels are removed, what does it cost to have the solar meter removed from the house electric meter? Maybe only a couple of hundred, but who do you call to do that if the solar company is no longer in business? An every day electrician, or the local utility company?

I re-ran the numbers and used an estimate of $2k to remove the system in year-11. That changed the NPV to $11,586.
At $5k, it changes to $9,737.

I just had my roof redone. I'm going to call my roofer and ask him what he'd charge to remove a standard PV system from the roof, dispose it, and replace any tiles/shingles necessary. I'll ask him for a range and see what he says.
Let's say he says $3k. I'd grow that by the historical inflation rate (say, 3%); in year-11 that's $4,150 (rounded). Plugging that into my calculation, NPV = $10,261.

In my example, it doesn't make any difference; I "upped" the reconciled value from $520k to $530k. But, that could be a coincidence of the initial assumptions. If one is going to use this type of analysis, consideration of the demolition/removal of the system is appropriate and getting a number to use as a reasonable estimate shouldn't be that hard.

As to the electrical re-wiring, I'm guessing it is easier to by-pass the inverter back to the standard utility line than it was to install the inveter (but I don't know). We are starting to get pretty granular here; I'll ask an electrician next chance I get.

 

[Meandering]

I had a single story commercial building with panels. Of course the wiring is different than for a house. They had an interior emergency cut off switch and the generation meter was inside the building.

However, comparable buildings in the same town did not show any premiums for solar panels over location. The generation reimbursements were lower than I expected, but considering they had disconnected the water heater, and their electric usage was only for lights, some sales staff computers and loading dock doors. It did offset most of that expense, but it wasn't a major expense to start with.

The overall reimbursement was less than a good sized lighted entrance advertising sign, considering cost to construct, permitting, yada, yada. Given the tradeoff, panels or a sign, the sign wins here.

.

 

[Terrel L. Shields]

For residential real estate appraisers valuing a home with an owned PV system, the cost of the system is immaterial; It is a sunk cost.

That seems to be a problem for some past threads and appraisers dealing with same.

said I applied the "safe rate" to the discount. I apply the safe rate because I argue, given the assumptions I've used, reducing the utility expense has no significant risk.

Again, for the time being, I have no evidence that the return on solar savings would be anything but low risk. If the laws are changed, then that mantra changes. But solar fans are opposed to change and politicos have little incentive at least until it seriously impacts the utilities themselves (it is a negative for the utility company for sure.)

Analysis = Credible
Appraiser's Judgment = Reasonable
The analysis gives an indication. The appraiser's judgment determines what, if any consideration, the analysis warrants in the valuation of the subject.

Exactly. Whether it ultimately turns out to be "right" is an entirely different issue that requires a prescience none of us possess. Excellent post

 

[BarrySW1963]

I didn't see this article linked in here. Adding it for easy reference for all.

http://adomatisappraisalservice.com/solarhomepariedsales.pdf

 

[bart nathan]

https://www.pvvalue.com/