Are solar panels going to increase the value of my home?
Thank you My Friend for asking me this question the other day, because it inspired me to write about it in the Discovery Islander where I will share my findings with all the readers.
The usual answer I came up with right away is the usual in real estate: “it depends”. I have done some reading and even asked my fellow real estate agents if they had any experience with this.
The answer is not black and white, as expected.
I think it’s a wonderful technology and I am a big fan of trying new ideas. The three most obvious benefits of using this technology is reducing our carbon footprint, less reliance on the grid, and most importantly cheaper utility bills.
I can see an argument in favour of a solar panel system to supplement your power usage. Cost of energy is going up as we have all been noticing over the years. The way that BC Hydro calculates your power bill is a 2 step system, where you pay one rate up to certain level and then anything above that costs significantly more. In winter for example my hydro bill triples, and I think solar panels integrated into my home could potentially reduce that electric bill shock.
The main things to keep in mind:
Cost - Although cost of panels and all the components have come down in price lately, the cost will vary depending on performance, durability and warranty. Other factors such as installation, permits, inspections, and any modifications related to hook up to your existing grid may add up to the cost.
Maintenance- what are the maintenance costs over time. The efficiency of solar panels degrades over time so the older panels will be perceived as less valuable and less efficient, and also will need more maintenance costs.
Efficiency- How efficient is your system, is it really worth installing it if you live in an area like Quadra Island where sunshine is a rare commodity for six months out of the year? I wish we had “rain panels” on the west coast; Or winter grey sky panels!
Location- Do you have the south facing roof top for best exposure of the sun, does your property have enough sunshine? A lot of the houses in our area of Cortes Island, Campbell River and Quadra Island have a lot of trees around the houses. A lot of efficiency of solar panels depend on unobstructed view of the sun. The panels are supposed to be facing the sun at all times for maxium efficiency; not always possible.
Permits- What are the local guidelines and requirements? It’s always best to hire a local contractor that has experience and knows how to plan a successful installation.
All things considered, is your property going to go up in value if you install a system?
Large installations on valuable homes tend to add more money to the value of the home than smaller and less valuable homes. Some studies indicate that some properties can benefit up to $6000 for every 1kW installed and working systems. Other sources suggest 2-4% increase in property value, but these numbers are based on hypothetical scenarios.
Most of the time however solar panels do not add significant value to most properties. Even off-grid properties may not increase the value because you’re trading the benefits for all the maintenance costs and unreliable service. For example, when temperatures drop down in the winter the panels don’t produce as much electricity.
The way I look at it is, if you can justify paying $30,000 for a system that will save you $100 in monthly electricity bill then go ahead, but don’t count on the value of the house to go up significantly. I think it’s a great idea of “free” electricity but just how free is it. The panels will provide most amount of electricity when your monthly bills are typically the lowest. In the winter when the panels are not quite as efficient unfortunately due to weather, is when you need to have a good source of supplemental power source.
From a numbers point of view if someone had $30,000 to increase the value of a property I would suggest redoing the kitchen first, then bathrooms, windows, insulation, but if all these options have already been covered then consider adding an additional dwelling on your property. Is there a way to build a rental suite?
The return on investment on the $30,000 invested in a rental suite that can be rented for $800 vs $100 saving on your electric bill is a no brainer in my opinion.
In conclusion, based on all factors the installation of solar panels is a fantastic way of reducing your cost of power and it’s an extra added feature for a property. Theoretically the more features a property includes the more attractive it could be to certain potential buyers. I remember when hot tubs were a great feature for buyers until that trend went away and now selling a house with a hot tub can be a bit tricky these days. As more information about solar panels become available more people will be able to make more educated decisions.
I personally, would definitely consider buying a brand new house with a renewable energy solution built in from the beginning because I can safely assume that all other systems in the house like insulation and windows have a high efficiency rating. As a buyer of an older home with only certain components that meet the efficiency level, I personally would not feel too thrilled.
The Canadian government is offering home owner grants that aim at helping home owners in saving energy costs. This could be a good first step in doing some research.
As you read through that government website you will realize that the promised "up to $5000" grant given to home owners doesn't mean what we think. There are a lot of limitations and conditions that one has to meet in order to take advantage of any of these programs.
Are you thinking of selling your home? Call me for a free home evaluation.
Roman Krzaczek REALTOR ®
Home number: 250-285-2141