Berkeley Lab Study Finds That Residential Photovoltaic Systems Boost the Sales Price of California Homes
New research by scientists at the Lawrence Berkeley National Laboratory (Berkeley Lab) finds strong evidence that homes with solar photovoltaic (PV) systems sell for a premium over homes without solar systems. "We find compelling evidence that solar PV systems in California have boosted home sales prices," says lead author Ben Hoen, a researcher in Berkeley Lab's Environmental Energy Technologies Division (EETD). "These average sales price premiums appear to be comparable with the average investment that homeowners have made to install PV systems in California, and of course, homeowners also benefit from energy bill savings after PV system installation and prior to home sale."
The research finds that homes with PV in California have sold for a premium (expressed in dollars per watt of installed PV) of approximately $3.9 to $6.4/watt (W). This corresponds to an average home sales price premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the Berkeley Lab dataset). That amount compares to the average investment that homeowners made to install PV systems in California—approximately $5/W over the 2001-2009 period.
"This is a sizeable effect," says Ryan Wiser, an EETD scientist and co-author of the study. "This research might influence the decisions of homeowners considering whether or not to install a PV system and of home buyers considering whether to buy a home with PV already installed. Even new home builders that are contemplating PV as a component of their homes can benefit from this research."
Approximately 2,100 megawatts (MW) of grid-connected solar PV have been installed in the United States. California has been and continues to be the country's largest market for PV, with nearly 1,000 MW of installed capacity. California is also approaching 100,000 individual PV systems installed, more than 90 percent of which are residential. Though an increasing number of homes with PV systems have sold, relatively little research has been performed to estimate the impacts of those PV systems on home sales prices.
The Berkeley Lab research is the first study to empirically explore the existence and magnitude of residential PV sales price impacts across a large number of homes and over a wide geographic area. The research analyzed a dataset of more than 72,000 California homes that sold from 2000 through mid-2009—approximately 2,000 of which had a PV system at the time of sale. "This is the most comprehensive and data-rich analysis to date of the potential influence of PV systems on home sales prices," says co-author and San Diego State University Economics Department Chair Mark Thayer.
The research controlled for a large number of factors that might influence results, such as housing market fluctuations, neighborhood effects, the age of the home, and the size of the home and the parcel on which it was located. The resulting premiums associated with PV systems were consistent across a large number of model specifications and robustness tests.
The research also shows that as PV systems age, the premium enjoyed at the time of home sale decreases. Additionally, existing homes with PV systems are found to have commanded a larger sales price premium than new homes with similarly sized PV systems.
"One reason for the disparity between existing and new homes with PV might be that new home builders also gain value from PV as a market differentiator that speeds the home sales process, a factor not analyzed in the Berkeley Lab study," says Berkeley Lab researcher and co-author Peter Cappers. "More research is warranted to better understand these and related impacts."
For more information, contact:
- Ryan Wiser
- (510) 486-5474
- Ben Hoen
- (845) 758-1896
- An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California [PDF]
- Two-page summary of the report's key findings [PDF]
- DOE's Solar Energy Technologies Program
- National Renewable Energy Laboratory
- Clean Energy States Alliance
This work was supported by the Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Program) of the U.S. Department of Energy, by the National Renewable Energy Laboratory, and by the Clean Energy States Alliance.