How Much Value Will a Solar Electric System Add to My Home

Many people like the idea of getting their light bill to $zero, but think that they may sell their house in a few years, so is it a good investment? Will they ‘get their money back’?

Great questions – Here’s the short answer: Yes!

Here’s the long answer: There’s different ways to view this issue, and no one “˜correct’ way. However, the consensus is the same – your home value goes up. We’ll look at 2 different approaches to answer the questions.

Solar ROI1. Imagine selling your home 5 years from now, when the fancy new photo-voltaic system you had installed is only about half paid for itself. So maybe it cost you $35,000 and you’ve had $17,000 in saved electricity bills since it was installed. You home goes on the market, and down the road a very similar home goes up for sale (who pay the utility company for their electricity). Now Mr. & Mrs. Buyer come along, and they love both homes. But when they do the math on their monthly payments including utility bills, they are saving about $280 per month (at today’s rates) with your home because of the solar electric system. This is the equivalent of a $60,000 mortgage at 4%! And the rate is locked in, so their utility bills won’t increase. For Mr. & Mrs. Buyer the decision is now an easy one, and you get the sale – at a much higher price than the other house down the street was being offered for.

Solar home appraisal2. Another point of view is that of the National Association of Appraisers, where a more scientific approach was proposed. They took the value saved each month, annualized it, and multiplied that figure by 20 to get a value. Using the previous example, $280 per month x 12 x 20 = $67,200. Having spoken with a couple of appraisers on this point, their feeling is that the calculation is ok, but they would want to see comparable home sales with and without a solar electric system installed to be able to accurately determine the value any given market puts on the solar system. For example, in Seattle where annual weather patterns may reduce the effectiveness of a solar powered system, a value may be added of $20,000. Consider this same system installed on a house in southern California (great weather, shockingly high electric costs) and the value may be determined to be $90,000.

But back to the short answer from the top of this blog – yes solar powered solutions to replace utility-company supplied electricity is a good investment in nearly all cases.