Full Title: Exploring California PV Home Premiums
Author(s): Hoen, Ben, Geoffrey T. Klise, Joshua Graff-Zivin, Mark Thayer, Joachim Seel, and Ryan H. Wiser
Publisher(s): Lawrence Berkeley National Laboratory (LBNL)
Publication Date: November 1, 2013
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Description (excerpt):
Although photovoltaic (PV) penetration in the United States is increasing rapidly, properly valuing homes with PV systems remains a barrier to PV deployment. Previous studies show that PV homes command sales price premiums. Still, some appraisers and other home valuers assign no value to a home’s PV system, and those who do often cannot find comparable home sales to help determine the PV premium. This has spurred the development of alternative methods of valuing PV homes, including the use of an income approach (based on the present value of PV energy produced over its useful lifetime) and the replacement cost approach (based on the present installed cost equivalent of the PV system). However, those approaches have just begun to have been validated against actual market premiums. Moreover, the drivers underlying PV home premiums are not well understood, which may deter some appraisers from assigning value to PV systems.
This study, which builds on a previous study conducted by the same authors (Hoen et al., 2011; 2013), helps fill both of those gaps by: 1) using regression analysis to examine actual PV home sales price premiums from a large dataset of California PV homes; 2) exploring the sensitivities of those estimated premiums to the size and age of the installed PV system at the time of home sale, and 3) comparing the actual premiums to predictions made with the income and cost approaches.