Overview
Solar electric systems increase the value of property the following ways:

• Solar PV systems reduce or eliminate the energy cost for the property.
• Solar PV systems protect or eliminate future rate inflation due to approved increases.
• Solar PV provides improved ability for multiple financial investment vehicles such as 401k, property upgrades, and increased cash position in property owned or operated.
• Solar PV is allowed to be in accelerated devaluation for tax purposes helping ownership values to improve quickly.

Based on Nevin, Bender, and Gazan from The Appraisal Journal it’s more than financially quantifiable to integrate solar. A solar electric system due to income generated increases home value by $20,000 for each $1,000 in annual reduced operating costs, supported by the entire Appraisal Institute. A solar electric system goes beyond other property improvements in percentage of cost recovered. Most solar systems will recover much more than 100% of its cost, only increasing over time as electric rates rise.

Commodity
Solar is required to compete on financial terms residential or business as communities expect, regardless of the intangible social benefits it provides. Some intangible benefits have high regard to some, but most seem to focus on the value. The real question to ask is, “is solar a commodity”, as we review its overall operational uses. Most identify with the terms asset or commodity.

Even today solar can be verifiable it lasts a very long time. Phoenix Energy Products has been able to check an install completed by PEP from 27 years ago out lasting the originating 10 year warranty at Rio Verde and 168th street in Scottsdale. As, property owners wonder if he or she must sell the property before the system has achieved payback, an appliance such as solar retains its value through the 25 years that’s offered today in warranty. With new laws in The American Recovery ACT of 2009, system values and depreciation have been addressed by allowing the owner of the solar system to accelerate the depreciation.

Increased Value Through Saving
When solar is added to a property the cost of operation is immediately reduced. Electric bills once extremely large amounts are reduced to almost zero per month excluding excise tax, franchise fees or minimum fees. Important factors when reviewing overall system production is based on the following:

• How much energy is being produced by the solar system in terms of percentage up to 125%.
• When the energy is generated at the property.
• When the energy is consumed at the property.
• The amount of energy exported to the utility based on Net-Metering measurements.
• Time of use rates for firm and non-firm energy imported or exported from the utility.

With the understanding of solar as a commodity creating opportunities to increase value from savings, its now a value statement. Articles by Nevin, Bender, and Gazan in The Appraisal Journal, the increase in appraisal value for a home with a solar PV system is 20 times the annul reduction in operating costs due to that energy efficiency measure. So, if a solar system can reduce the electrical bill by $3600 per year ($300 a month), the home is worth $72,000 more in increased appraised value.

Appreciation Overview
Homebuyers are more understandably more geared to pay more for a used solar system on an existing home than the net cost of a new system. Even if retro-fitting would indicate they can get a new one at 100% because the research has been completed and the work done. We see this phenomenon today when a buyer pays 4% more for homes with decks than if purchasing a home without a deck and contracted for its installation. More convincing numbers can be found from Remodeling Online in their reports in such cities as Boston, St Louis, or even in San Francisco paying 215% of the cost for retrofits. Other retrofits were closer to 100% for other types of property improvements were reviewed.

Depreciation Overview
As the solar system ages, appreciation is expected to continue as electric rates increase. For example, the more rates rise the greater the ratio 20 to 1 creates on value. This aging will continue since most solar PV systems now generate at least 80% of their power to 25 years and hardware (not financial) depreciation will be expected to accelerate at this time. All system warranties are required to be at least 25 years before solar modules are set to expire.

Generation Value Support
Homebuyers will be at the least be willing to pay 100% of originating costs for a retrofit system with 20 to 1 ratios only increasing with inflated electrical prices. The overall feeling of the current or future owner will be the assurance that they can get their money back out of the system if they need to sell. Even in California who is now experiencing a price rebate reduction are seeing prices for solar go through the roof. Customers will quickly understand the value as all of these formulas currently starting to play out in Arizona.

Variables: $3.00/W Rebate, $1000 AZ Tax Credit, 30% Federal Tax Credit
Simple roof integration by a developer/service provider with minimal complications.

CONCLUSION

There are so many ways solar increases value from social responsibility, health, securing our homeland, but most of all our communities. Property values are shown in this article to directly affect the ability to rise above comparables to other properties without solar due to real income savings. Solar is a commodity by disabling the cord from the buyer or property owner from the energy grid directly tied to worldwide market conditions. Solar PV systems reduce or even eliminate the current and future energy operating cost of the property. Solar creates a hedge against the effects of electric rate inflation. As a component of the property they can provide an attractive vehicle for financial investment. All these items are tangible benefits financially quantifiable. A Solar PV system increases the home value 20 to 1 for every annual dollar reduced operating costs due to the system. In Arizona, a solar PV system compares directly with other home improvements in percentage of cost recovered, often recovering more than 100% of its originating install cost.

www.phoenixenergyproducts.com www.kellerwilliams.com www.soldonphoenix.com www.solarealty.com

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This entry was posted on Wednesday, January 20th, 2010 at 3:38 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.