In addition to the obvious benefits of having a solar PV system installed on your home, shed, or office–savings on electricity bills, a carbon emission-free power source, and the envy of your neighbours–going solar could also potentially increase the value of your property. There are two primary reasons for this, both of which are fairly obvious: a reduced cost of electricity and a favourable perception of solar power with the Australian populace.
How does solar impact the value of a home? Ask the buyer.
Perceptions of solar power: Overwhelmingly positive
In most places the value of a home is based on market principles: How much would a potential buyer be willing to pay for it? The answer to this question in turn depends on what the house or property has to offer, and what is of value to the customer. Not everyone has the same preferences, of course, but there are perceptible trends that can be observed in public sentiment–and solar power seems to have the approval of the public, according to a survey undertaken in September of 2011. In the UMR survey, 8 in 10 people reported having a positive view of solar energy, with only 2 in 10 having a negative perception of power from the sun. Solar also topped the list of popular renewable energy sources.
Of course a survey is just a survey and should not automatically be taken as fully representing public sentiment, but these results do indicate that solar power could potentially impact on the price of a property in a positive way.
The financial benefits of buying a solar home
Although the survey did not delve into the particulars as to why solar has attained such a good reputation, it is fairly safe to guess that the fact that solar PV is a silent, (usually) discreet, and pollution-free form of energy is a big part of it. There are, of course, also the more tangible financial benefits a system provides homeowners, especially with the incentives currently on offer in Australia–up-front solar rebates in the form of RECs/STCs from the Federal Government, and (depending on your state) Solar Feed-in Tariffs that offer ongoing savings–or possibly even income–thanks to your solar energy generator.
Unfortunately, solar feed-in tariffs are not inheritable in every state: If you buy a home with solar panels in NSW, you won’t inherit either of the previous 60c/kWh or 20c/kWh Feed-in Tariffs under the now defunct Solar Bonus Scheme, but home buyers will be able to inherit South Australia’s 44c/kW FiT. Even in the absence of Feed-in Tariffs, however, solar will still save you money on electricity, especially if you are careful with the timing of your electricity use. All other things being equal, someone in the market for a home would most likely opt for a home with a solar array–grid-connected systems are virtually maintenance free (=no headaches) and promise to reduce electricity bills.
The search for Australian data…
The opinions in this article are just that, and there is currently no solid data about solar’s ability to drive up home value in Australia, but what is ‘in’ in the real estate market, like other markets, is always subject to fluctuation. Even so, US ‘solar power services’ company SunRun has compiled a list of resources that point to the ways in which solar power installations have contributed to a rise in home value in homes in California and other US states. The company has also published a comprehensive and well-referenced report (pdf) that outlines some of the stats and trends that can be observed in the American real estate market. According to the report, homes with solar sell faster and have higher property value due to their ability to deliver lower electricity bills. To back up the claim that this is not a phenomenon restricted to California, the EU Energy Agency has also suggested that solar panels, as a low- or zero-maintenance energy production plant, can only add to the value of a home and whose value should be taken into consideration in deciding the size and terms for home mortgages.
Given the rise of positive public sentiment towards solar and the obvious financial benefits in Australia, it seems unlikely that a home’s having solar panels would be a disincentive for future prospective buyers. It’s difficult to say just how much, and ultimately the determination is of course up to the reader, but it seems likely that, as in California, the presence of a solar installation will be of benefit and not detriment to an Australian home-seller.
Written by James Martin
© 2011 Solar Choice Pty Ltd
Resources and links:
RenewableEnergyWorld.com Blog, “Do Solar Systems Increase Property Values?”
He is now the communications manager for energy technology startup SwitchDin, but remains an occasional contributor to the Solar Choice blog.
James lives in Newcastle in a house with a weird solar system.
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