Solar systems and home valuation

by Matthew Gast

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Almost a year ago, I asked if there was any research on the value of a photovoltaic array on home values. One answer arrived in my mailbox this morning, as a reference in a mailing from a company offering to install a solar array.

According to the mailing, there has been some research into the financial value of the array. The mailing cites The Appraisal Journal, a publication of the Appraisal Institute, a professional association of real estate appraisers. According to the mailing, an article in the October 1999 issue found that a $1 reduction in annual utility bills added $20 to the home value.

If you follow the link to the October issue, you'll notice that the text of the article isn't on-line, so I haven't read it. I'm assuming that the article titled "More Evidence of Rational Market Values for Home Energy Efficiency" makes the connection between utility bills and home value, but without the text of the article, I can't be sure. Nevertheless, it's a tantalizing data point. I wonder to what extent the value depends on the area of the country, or the size of a home's utility bills. I would also expect the $1 reduction-to-$20 valuation increase relationship would also break down for extremely large arrays.