Appraising a Solar System

The dollar value a solar installation adds to a home’s resale is still debated.  Comparable sales are usually the basis for appraisals, but are not use much in valuing solar installations.  Income capitalization is a new approach, in which the homeowner determines the capitalization of the net income the solar system can generate.  Using a specially prepared spreadsheet, the user enters several values, including the local electricity rate, the local utility’s escalation rate, and operations and maintenance expenses over the remaining useful lifetime of the array.

The PV system’s energy production is determined using solar resource calculations tied to the National Renewable Energy Laboratory’s PV Watts model, which accounts for factors such as resistance and shading. The user also inputs the age of the modules and inverters, the system’s location, and its slope and azimuth.

Ultimately, the model provides a range of appraisal values – a low figure, medium figure and high figure – for the present value of all energy remaining in the system.

A Yes solar system analysis and proposal includes all of this information.  While the appraisal industry is till grappling with best practices for adding the value, there are now several studies showing the solar system does add value to a resale.  The system can be assigned at closing, and all warranties remain in effect as long as it is not disturbed and assigned to the new owner.  For information on this appraisal model click here.

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