All things being equal which house do you think will sell for more, the one on the left or the right?
As solar power becomes more commonplace globally, houses with installed solar panels are entering the real estate market. If you have installed a system or are thinking of it, you may ask “Does solar PV increase the value of my home?” In developed solar markets such as the US, Canada and the UK, studies have been conducted which indicate that homes with solar PV sold at a premium relative to their non-solar counterparts, and also that such homes sold faster.
The findings in the US were as follows:
- The Berkeley National Laboratory (“Exploring California PV Home Premiums“) found that “each 1-kW increase in size equates to a US$5,911 higher Premium”
- The National Bureau of Economic Research (“Understanding the Solar Home Price Premium: Electricity Generation and ‘Green’ Social Status“) found that PV systems “add 3.6% to the sales price of a home… [which] corresponds to a predicted US$22,554 increase in price for the average sale with solar panels installed”
- The Colorado Energy Office (“The Impact of Photovoltaic Systems on Market Value and Marketability“) found that “owned PV systems typically increase market value and almost always decrease marketing time.”
Anyone who has had a solar PV system installed at their home already knows that solar is a great investment. Solar possesses certain unique characteristics when compared to other home improvements:
- Proven ROI as a result of reduced electricity costs over the life of the system
- Environmental ROI from reduced carbon emissions
- Reliable and robust equipment designed for 25+ years, which increases in value over time as traditional electricity prices rise
The same can’t be said about a new granite countertop, additional bathroom or remodeled kitchen.
What about solar and the real estate market in Barbados?
9 real estate companies were contacted about whether they had encountered any listings for homes with solar panels installed. None of them had as yet. It is still early days for the nascent solar PV industry in Barbados which explains the response. Homeowners who were planning on selling their home would be unlikely to have invested in a system just before selling. On the other hand, those who recently invested in a system probably did so since they were planning to stay in that property for a while. Realtors did express that they thought homes with solar photovoltaic panels would sell for a higher price than homes without. Additional feedback was “It is definitely becoming coming up on the market more these days. I think it’s a big plus for any property” and “I do think that it will certainly be an added feature and a very desirable one.”
This aligns with what you would expect since homes with solar panels installed have low or no electricity bill. In some cases, if energy is conserved, the home is energy efficient or the system size is large, homeowners actually receive a cheque from BL&P for excess electricity produced. Imagine that, an income generating asset within (well on top of) your home. Can you think of any other customer good, or item in your home which is an asset and actually puts money in your pocket?
As of November 2014, there is not enough data yet from the Barbadian real estate market to determine the effect of solar PV on home values. However, the trends in mature solar markets indicate that it does increase the value and subsequently the final sale price of a property. When more time has passed, more data can be collected. Until then, consider adding solar PV to your list of value adding home renovations.