I had a fascinating conversation with a gentleman recently who wanted to add a Solar PV System to his home and had already spoken to two real estate brokers for advice. One broker had a Solar PV System himself and was adamant that solar was the right thing to do. The other broker was dead set against it and cautioned him that whatever gain he might get with energy savings he would lose because of curb appeal. Obviously, he was torn. So let’s break down the number on this situation.
The largest hurdle for most homeowners is the upfront cost of installing a system. Let’s assume the system is going to cost $35,000 to install. That’s a sizable fee and many homeowners simply don’t have that kind of cash lying around. The good news: there are few lending institutions that will finance the system as of this writing.
Puget Sound Cooperative Credit Union is a great resource for financing solar or other energy-efficient upgrades. Their basic loan products are for up to $35k with fixed rates usually at 4.5% with no money down for those with qualifying credit scores and assets. Super friendly folks who can usually pre-qualify you over the phone. Their loan is that the collateral is actually the solar equipment instead of the house, so you would not be impacting a HELOC (Home Equity Line of Credit) if you have one.
Umpqua Bank is another lender with a Green Street lending program. There are several types of loans available for those wanting to finance energy-efficient updates to their home, including unsecured.
Let’s say you’ve made it past the hurdle of having the cash or loan necessary for such a large investment. Now it’s time to sit back and collect some checks. The largest check (or credit) will come in the form of a tax credit. You’ll want to check the Database of State Incentives for Renewables and Efficiency frequently to look for great tax incentives to go green. In our sample case scenario, there is a 30% personal tax credit for a Solar PV System that expires December 2016. That means a credit of $10,500. Obviously, you’ll want to check with your tax professional to make sure you can take advantage of this credit. Your cost of the PV System has now effectively been reduced from $35,000 to $24,500.
If you live in Washington State and you buy solar panels and invertors made in Washington, you’ll also receive a Production incentive of up to $5000 per year until June 2015. Let’s assume in our case study we are producing enough power to qualify for a $3500 check per year until the expiration of this program. If our panels were on our roof in early July of 2014,
Or a total of $14,500 in production incentives, bringing the cost of the system down to $10,000 over the course of six years. You’ll want to check with your local utility company about the specifics of any net metering or production incentive programs.
Once the rebates and production incentives are accounted for we could now start looking at how much less our power bill might be. If we assume it’s $75 less each month, that’s another $5,400 in five years. We could now speculate that the system has only cost us $4,600. And the sooner we add solar, the sooner we realize the savings and the longer the system saves us money.
Now here is where we open our can of worms. Does Solar PV Panels add resale value? Or does the Solar PV Panel decrease the value because of a negative impact on curb appeal. Whether we are discussing resale value of a remodeling a kitchen, adding a bedroom or solar panels: some basic restrictions exist in contemplating added resale real estate.
One example, a home can be over-valued for its neighborhood. If you live in a neighborhood with modest homes and a median price of $350,000 and you add improvements of $50,000 it won’t mean your home is worth more than $400,000 instead it’ll probably be closer to $375,000 and that’s all you’ll ever get even if you add a toilet made of gold.
Another and more relevant example, how much inventory does a buyer have to choose from? If there is only one home in the area the buyer wants to live in, then it won’t matter if the home has an updated kitchen or solar or anything else, the buyer will make the compromises necessary to live in that neighborhood. However by contrast, if there are several homes to choose from, the buyer will choose the home with the most features and benefits in their desired location and within their maximum price range.
Obviously, a home that has an energy-efficient system such as a solar PV panels would be enticing to anyone who likes low utility bills, right? The New York Times has some pretty powerful data to support our conclusion, read more here by clicking here. The article states: “Researchers found that buyers were willing to pay a premium of $15,000 for a home with the average-size solar photovoltaic system (3.6 kilowatts, or 3,600 watts), compared with a similar home without one. Put another way, that translates to about four additional dollars per watt of solar power.”
Remember at the beginning of this post I mentioned one of the real estate brokers told my case study that the solar PV panels would ruin his curb appeal? As you can imagine, that was like hearing I had an ugly baby. Granted there are some homes that have an architectural quality to them where adding panels would tarnish a beautiful home design. The reality, however, is that most of us don’t live in those homes.
Today’s panels are in my opinion sleek and beautiful, and a quick Google image search of solar PV panels will showcase this over and over.
Many Solar PV Panel installers can provide a simple Google map image with a layout of where the panels would go to help you visualize the end result. Feel free to send me a photo of your home and I’ll give you my thoughts on how the panels might interfere or compliment the existing curb appeal. There are architects that specialize in energy-efficient design and might be able to get you some drawings as well as suggest other architectural elements that can pull the look together for you.,