Title of Peer Reviewed and Accepted Research Paper
Author(s)
- Ben Hoen, LNBL;
- Sandra Adomatis, Adomatis Appraisal Services;
- Thomas Jackson, Real Property Analytics;
- Joshua Graff-Zivin, University of California at San Diego;
- Mark Thayer, San Diego State University;
- Geoffrey Klise, Sandia National Lab;
- Ryan Wiser, LNBL.
What are the key findings of your research?
We find home buyers are consistently willing to pay PV home premiums across various states, housing and PV markets, and home types. Further, we find that a replacement cost net of state and federal incentives is a better proxy for premiums than gross installed costs, and that the present value of energy cost savings is a good signal if it accounts for tiered volumetric retail rates.
These proxies are important because in many neighborhoods, an adequate quantity of comparable PV home sales has not accumulated so other methods to value solar are needed.
Why do your findings matter?
A home is often the largest asset in most individual’s portfolios. With the numbers of solar homes growing by almost a million every two years, understanding how these energy systems affect the value of the asset is important. Moreover, misinformation about if and how much solar affects home values can distort both the solar sales and real estate marketplaces. Our work helps clarify what is actually happening in this regard.
How will this make a difference to the implementation of sustainable energy?
There are a number of possible beneficiaries of this work including, solar industry practitioners, members of the academic community, state and local policy makers, and even secondary mortgage lenders and underwriters.
For example, we know that large lender/underwriters such as Fannie Mae, Freddie Mac, and FHU/HUD see the growing number of solar homes in the US, and increasing densities over 20% in some neighborhoods. As homes with solar enter their portfolios they are cognisant that understanding the value implications of solar, and giving appraisers methods and tools to properly estimate those values, is increasingly important. This work, we expect, will help these institutions, and other market actors, refine their practices for these homes.
What are the next steps that need to be taken to push this research forward even more?
We see a real time market-specific set of solar home estimates to be the next frontier and are trying to develop such a system. We hope to collaborate with some of the secondary mortgage market actors, the national real estate online portals, as well as continuing our collaboration with real estate practitioners.
Accessing the full text version of the paper
Multi-state residential transaction estimates of solar photovoltaic system premiums (Click here for full text access to the Paper, subscription or pay per view available)
About the Corresponding Author
The Electricity Markets & Policy Group, at Lawrence Berkeley National Laboratory, informs public and private decision making within the U.S. electricity sector through independent, interdisciplinary analysis of critical electricity policy and market issues. Within this group, my work has tended to focus on the intersection of renewable energy, the public, and economics. Therefore, solar installations and the interaction they have with the real estate marketplace has been an area I have explored over the last few years. This is an interesting topic for the US Department of Energy, which supported this work, in that perceived inefficiencies in the real estate marketplace for solar homes is one of the barriers to adoption of solar, and therefore can drive up solar soft costs.