Now that there’s a confirmed, true appraised value boost associated with solar panels installed on homes, more homeowners are using sun power, but they need to know how to best turn it on.
The benefit of energy from the sun via a solar panel system is immediately obvious once the system is up and running and that first electric bill comes in at a fraction of the previous cost.
But studies have shown solar panels pay for themselves, not only in energy saved, but in the added price buyers are willing to pay for homes with solar systems.
Late last year, the Appraisal Institute (AI) introduced the first ever “Residential Green and Energy Efficient Addendum” to better analyze values of energy-efficient home features.
Compared to comparable homes without solar panels, buyers are paying $17,000 to $20,000 more for homes equipped with solar panels — an amount nearly equal the cost to install the system, after rebates and tax incentives.
“We find compelling evidence that solar photovoltaic (PV) systems in California have boosted home sales prices,” says Ben Hoen, a researcher at the U.S. Department of Energy’s (DOE) Lawrence Berkeley National Laboratory (LBNL).
Also, the Yahoo! Home Horizon 2012 study of homeowners, buyers, sellers and renters extolled the intrinsic value found in green homes when it found energy efficiency was at the top of the list of features buyers most desire.
Saving money while helping to save the planet has become quite a selling point.
One in four — 25 percent — of all single-family homes built in 2010 earned the Environmental Protection Agency’s (EPA) Energy Star rating, up from 21 percent in 2009, according to the agency.
“The trends we saw in 2011 – primarily, that home solar was truly entering the mainstream market – should continue at a strong pace this year. Producing electricity from your own rooftop is getting easier and more affordable,” said Ravi Thuraisingham, president and chief financial officer of American Solar Direct, a Santa Monica, CA-based residential solar power company.
Thuraisingham, along with other experts, say homeowners going solar should consider these key factors.
• License – Shop around for the best licensed contractor. Seek referrals from family members, friends, co-workers and others you trust, who also have been satisfied with that solar contractor.
If available in your state or jurisdiction, specifically seek contractors with a solar installation license who also has a solid installation record and lots of satisfied customers.
California offers a solar contractor license.
• Lease versus own – Because the cost of a solar panel system can cost $25,000 to $30,000 or more, an alternative is to lease the system for little or no money up front. Under a leasing plan, the installer owns and maintains the system, along with handling securing permits and managing other details leading up to turning on the system. Leasing can be an affordable option for homeowners who want to immediately see savings from lower electric bills, without having to wait for the system to pay for itself through savings or when the property is sold.
• Incentives, rebates, tax credits – To help cut costs for homeowners who buy or finance their own system, a federal tax credit is available for up to 30 percent of the cost of a solar photovoltaic system, including materials and installation on both new and existing homes.
Additional state incentives, rebates and tax credits vary.
In California, you won’t get taxed for the extra value a solar panel system adds to your home. The property tax exemption on the books lasts until 2016.
The California Solar Initiative Incentives (CSI) through Pacific Gas and Electric (and other major utilities, elsewhere in the state) are based on a solar panel system’s performance and offers a one time rebate or monthly rebate payments for five years.
CSI also offers a Single-family Affordable Solar Homes Program (SASH) for low income households served by PG&E and other major utilities.
Keep in mind, a leased solar panel system is “owned” by the installer so rebates, tax credits and other incentives go to the company, says Rick Sheridan, product manager for Residential Solar 101, a San Francisco-based solar panel education Web site.
Sheridan, who has mystery shopped companies offering solar leases, says installers offering leases typically uses the rebates, tax credits and incentives to reduce the price of the project and, in turn, lower the lease payment.
See the U.S. Department of Energy’s Database of State Incentives for Renewables & Efficiency for a rundown of all the federal, state, county and city incentive programs.
• Net metering – The utility company generally won’t let you build a solar panel system that will generate more power than you need, but it can happen, especially during the summer months. Your utility can install a “net meter” to track surplus energy which is exported to the grid. The surplus energy generates credits, up to a cap, which you can use during times when the system may not meet your energy needs, further reducing your energy costs.
• In-house service vs. outsourcing – Consider a one-stop solar installer who has all the staff and services in-house, including customer representatives, installers, maintenance and financing for a “continuum of care” level of service. However, if you purchase instead of lease, you’ll likely need financing and as is the case with any large purchase, you should shop around. Compare several loans and compare leasing terms with loans.
• Home values – Studies show that a home’s value increases when it contains the best available energy efficiency devices, because a home’s overall operating cost decreases when it uses less water, gas and electricity. Rooftop solar is becoming a standard feature on new homes for this reason. Check with appraisers to determine the boosted-value impact solar has on homes in your neighborhood.
• What if you move? – Homebuyers pay a premium for homes equipped with solar and there’s an increase in the percentage of prospective homebuyers who want a home with a smaller carbon footprint. Also, you can assign a solar lease to the home buyer if he or she passes a credit check.
• Remain energy efficient – Just because you have solar panels on the roof doesn’t mean you can crank up the heat, leave lights burning and otherwise waste energy. Some power still comes from your electric utility and being energy efficient always ensures the lowest monthly costs.
• Appearance – State laws generally prohibit homeowner associations, municipalities and other organizations from prohibiting rooftop solar. Still, select an installer who creates a custom design to cause the least visual disturbance to your neighbors.
• New technologies – Don’t over-buy and choose expensive, exotic, but not fully tested newer solar technology. Today’s panels should continue to be efficient for their 20- to 30-year lifespan.