Solar sweet spot – the benefits of solar power on real estate

| by Melissa Baldridge
Solar sweet spot – the benefits of solar power on real estate

Almost daily, people ask me about solar and how it interacts with residential and commercial real estate – whether it’s worth it, does it appraise, ways to implement it, etc.

In this post, I’ll answer some of the questions I get asked routinely about the nexus of solar and real estate.

HOW CAN I OWN OR BUY SOLAR?

There are several ways to take ownership of solar energy, and/or the good karma you get from it.

REAL ESTATE IMPACT – One of theKEYSto realizing value from solar isTO WORK WITH PROFESSIONALS WHO ARE TRAINED IN IT.And I mean beyond solar installers. By their own rules, real estate brokers and appraisers must have “competence” in working with “complex” properties (read, “high-performance” and “green”). IMHO, there are legal ramifications for those who don’t, yet represent these specialized properties anyway. Look forEcoBrokersas real estate brokers. AndPOUND THE TABLEwith your mortgage lender to get appraisers trained this valuation. See myprevious blogson this topic.

BUY – You can buy the solar array, inverters and meter outright. You call a solar provider who sells systems, they spec one for you, you write the check, and BOOM!  They install a solar system that's all yours.

Image via 
Architerials.com

POWER PURCHASE AGREEMENT (“PPA”) – This is the solar lease of the 21stcentury, and a couple of years back, over 80 percent of new residential solar customers here in Colorado used PPAs. Basically, a solar provider installs a system on your roof. They own it and all the solar credits (“RECS”) that accrue from it, and YOU purchase your electricity from them at a specified rate that locks in for 20 to 25 years (depending on agreement). That rate is usually less than what regular utility customers pay for electricity, AND it hedges the risk that your electric rates will rise since they’re fixed for the duration of the agreement.OFF-SITE– More and more, utilities are allowing customers to take credit for solar energy that’s generated at other sites like community solar gardens. And some bleeding-edge cities like Boulder even allow this for energy code compliance. Some people have small rooftops, and this allows anyone to purchase solar, non-fossil-fuel energy even if you can’t generate it at home.

HOW MUCH DOES SOLAR COST?

That depends on where you are, the utility rebate landscape you’re subject to, and the solar providers in your area. A rule of thumb is $3 per watt (including both hard (material) and soft costs (design and permitting). So let’s say you have the room to install a 6 kilowatt system (a large-ish size I see installed a lot), that’s 6,000 times 3, or $18,000.

IS THERE A TAX BENEFIT FOR SOLAR?

Absolutely. The Federal Renewable Energy Tax Credit allows for a 30 percent tax credit for solar systems owned and installed. THIS IS SET TO EXPIRE AT THE END OF 2016.I believe Congress will renew it, but it may be a last-minute pass. If you want to take advantage of this, I highly recommend you get your solar inked now so that you don’t get caught in the crunch next year.

DOES SOLAR ADD VALUE TO A PROPERTY?

The short answer is yes, and it can be a significant amount based on the energy generated. There are several ways to do that, including using HERS ratings that capture the energy generated over time. I’ve written a lot about this. Please read my previous blogs about green appraisals, or reach out for help.

REAL ESTATE IMPACT – Solar hot water systems are one of the most under-used and underrated green systems going. I’ve seen them in a few markets, like Hawaii, where gas is prohibitively expensive. But a basic solar hot water system will run about $12,000 - $14,000 (más o menos, without the tax credit), and they last for decades. If you’re building or renovating a property you’re going to keep for awhile, consider this feature.

 

IS MY HOUSE A GOOD SOLAR CANDIDATE?

One quick way to find out is through Sun Number or Google Earth. Both give quick looks at your rooftop, and Sun Number gives you a 1-to-100 number about how good your solar exposure is. Google Earth gives a decent snapshot of how clear your southern and eastern exposures are. If you’re not sure whether solar will work, call a solar provider to explore it further.

Photo of the Clarkson Green project in inner-city Denver by Andrew Ehrnstein.

IS SOLAR UGLY?

If you think solar’s ugly, you may be confusing solar electric (PV, photovoltaic) with solar hot water systems. The hot water systems that are often propped on rooftops at cockeyed angles usually come from the time of President Jimmy Carter – the first wave. And what I hear about those systems is that clients LOVE ‘em. They’ve worked for decades and continue to. If you still think solar is unattractive, compare it to a $400 energy bill.

Reach out any timewith questions. And if you mention you read this blog, I’ll give you a thumbnail solar assessment for free. 


Topics: Photovoltaic / Solar Panels, Rebates / Tax Credits, Solar Power, Sustainability Trends & Statistics


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