Monthly Solar Lease in Phoenix May Cost You 8% In Home Value!

[Ian S]

From today's Arizona Republic:

Solar panels owned by a home seller add 4 to 6 percent to the value of a home sale, often less than the cost of the panels, according to an analysis of local home sales and reports from real-estate agents. Houses with leased solar panels actually sold for less than those with no solar.

"Once it has that new lease payment hooked to it, it actually makes the home value considerably less," said Shaw, echoing the sentiment of appraisers and other experts in Arizona real estate.

"Do I believe these houses use a tremendous amount less electricity in the long run? Yes," he said. "But marketwise, it doesn't do a damn thing."

The disconnect between buyers and sellers over the value of rooftop solar is coming to the forefront as many of the thousands of people who have installed solar in recent years look to sell....

"I found that owned (solar) systems almost always seem to generate a small premium in the sale price of the home while leased systems do the opposite," Orr said. "I think it is fair to suggest that an owned solar system can add 4 to 6 percent to the value of a house."

He said a leased solar power system can detract 3 to 8 percent from the value of a metro Phoenix home.

Interestingly, because of its new demand charge, SRP has seen solar installs pretty much halt in its area. As a result, those homes that were grandfathered into the old rate structure apparently get a substantial premium in appraisal value. It appears that a seller would be best going with a real estate agent who specializes in solar home sales as they may be better at marketing a home with solar installed.

[J.P.M.]

From today's Arizona Republic:



Interestingly, because of its new demand charge, SRP has seen solar installs pretty much halt in its area. As a result, those homes that were grandfathered into the old rate structure apparently get a substantial premium in appraisal value. It appears that a seller would be best going with a real estate agent who specializes in solar home sales as they may be better at marketing a home with solar installed.

Interesting information. Thank you Ian.

[Ian S]

Interesting information. Thank you Ian.

You're welcome! Makes the monthly lease even less attractive at least here in Phoenix. There wasn't any mention of a prepaid lease like I have although based on what's presented in the article, it probably would not be considered to add any value during an appraisal. Perhaps a moot point for me considering I'll likely do the buyout in year 7 of my lease. Plus, I have no plans to move unless I win the lottery and then I won't much care about solar or my electric bill!

[Willaby]

Solar in Scottsdale?

Hi Ian,

Since you're in Phoenix, we've been looking to retire in N. Scottsdale (from San Diego). Why so little solar there? Electricity may cost less than CA, but so does the solar installation. Is it CCR's, code, utility or other dis-incentives? For the limited time I've spent there and looking on Google maps, I just don't see much of it. There are a lot of expansive recessed flat roofs that just seem prime for solar. You wouldn't even need to angle the panels much, just lay them out and let them soak up that AZ sun. I do see solar pool heating, but that isn't even as necessary.

With all that desert sun and need for A/C, I'd be anxious to get solar, but maybe I'm missing something?

[J.P.M.]

Hi Ian,

Since you're in Phoenix, we've been looking to retire in N. Scottsdale (from San Diego). Why so little solar there? Electricity may cost less than CA, but so does the solar installation. Is it CCR's, code, utility or other dis-incentives? For the limited time I've spent there and looking on Google maps, I just don't see much of it. There are a lot of expansive recessed flat roofs that just seem prime for solar. You wouldn't even need to angle the panels much, just lay them out and let them soak up that AZ sun. I do see solar pool heating, but that isn't even as necessary.

With all that desert sun and need for A/C, I'd be anxious to get solar, but maybe I'm missing something?

One thing to clear up: Horizontal array orientation most anywhere is not usually the best orientation. For one thing, they produce lower annual output in most temperate latitudes than panels tilted toward the equator. But almost as big a concern is that they get dirty and STAY that way. Horizontal orientation is usually a mistake, maybe even more so in dry/dusty climates.

[Ian S]

Hi Ian,

Since you're in Phoenix, we've been looking to retire in N. Scottsdale (from San Diego). Why so little solar there? Electricity may cost less than CA, but so does the solar installation. Is it CCR's, code, utility or other dis-incentives? For the limited time I've spent there and looking on Google maps, I just don't see much of it. There are a lot of expansive recessed flat roofs that just seem prime for solar. You wouldn't even need to angle the panels much, just lay them out and let them soak up that AZ sun. I do see solar pool heating, but that isn't even as necessary.

With all that desert sun and need for A/C, I'd be anxious to get solar, but maybe I'm missing something?

Compared to Cali, electricity is cheap here averaging $0.13-0.15 per kWh. You do use a lot though in the summer months. The utilities have declared war on their solar customers and are winning the battle easily. SRP, one of the two Valley utilities has effectively shut down solar installations in their area via onerous fixed charges and demand fees that eliminate any incentive to put money into solar. APS, the other utility, has to get their add-on fees approved by the Corporation Commission but the utility bought the two newly elected commission members last November, and so now has full control of the 5 member commission. I expect new APS fees to also shut down residential solar installations in their area. They do however have a rooftop solar program of their own where they rent your roof space for a few bucks a month that shows up as a credit on your electric bill. Woo-hoo!

I'm frankly surprised that anyone would want to move here from San Diego unless forced to by circumstances. The scorching summers are only partly offset by the nice winters but you already have a great climate in San Diego. I suppose the one saving grace is more affordable real estate here.

[J.P.M.]

Compared to Cali, electricity is cheap here averaging $0.13-0.15 per kWh. You do use a lot though in the summer months. The utilities have declared war on their solar customers and are winning the battle easily. SRP, one of the two Valley utilities has effectively shut down solar installations in their area via onerous fixed charges and demand fees that eliminate any incentive to put money into solar. APS, the other utility, has to get their add-on fees approved by the Corporation Commission but the utility bought the two newly elected commission members last November, and so now has full control of the 5 member commission. I expect new APS fees to also shut down residential solar installations in their area. They do however have a rooftop solar program of their own where they rent your roof space for a few bucks a month that shows up as a credit on your electric bill. Woo-hoo!

I'm frankly surprised that anyone would want to move here from San Diego unless forced to by circumstances. The scorching summers are only partly offset by the nice winters but you already have a great climate in San Diego. I suppose the one saving grace is more affordable real estate here.

Perhaps neither party has lived in the other's location. Having spent a fair amount of years in the desert, and here, I'd offer both are nice, but there ain't no perfect place.

[Willaby]

Compared to Cali, electricity is cheap here averaging $0.13-0.15 per kWh. You do use a lot though in the summer months. The utilities have declared war on their solar customers and are winning the battle easily. SRP, one of the two Valley utilities has effectively shut down solar installations in their area via onerous fixed charges and demand fees that eliminate any incentive to put money into solar. APS, the other utility, has to get their add-on fees approved by the Corporation Commission but the utility bought the two newly elected commission members last November, and so now has full control of the 5 member commission. I expect new APS fees to also shut down residential solar installations in their area. They do however have a rooftop solar program of their own where they rent your roof space for a few bucks a month that shows up as a credit on your electric bill. Woo-hoo!

I'm frankly surprised that anyone would want to move here from San Diego unless forced to by circumstances. The scorching summers are only partly offset by the nice winters but you already have a great climate in San Diego. I suppose the one saving grace is more affordable real estate here.

That's sad that there is a solar deterrent of any kind in sunny AZ. My in laws were paying ~$300/month for summer electric there, just an average size house too. I was thinking of a way to run off-grid a/c direct from solar. Their pool didn't have solar or any heater, but it didn't need it. Sounds like I'll need to educate myself on the utility situation there.

As far as CA v AZ, we love the desert, except the 3 months of summer as you noted, so we'd get out of town. We favor AZ politics & taxation. Tax savings all-in would be $10k/year savings. We have relatives there too and the real estate affordability you mention is a factor (I want a 4 car garage). etc.

[Willaby]

One thing to clear up: Horizontal array orientation most anywhere is not usually the best orientation. For one thing, they produce lower annual output in most temperate latitudes than panels tilted toward the equator. But almost as big a concern is that they get dirty and STAY that way. Horizontal orientation is usually a mistake, maybe even more so in dry/dusty climates.

JPM - thanks, you're generally stating the obvious, but many of the homes in N.Scottsdale have roof access, used as patio's, for telescopes, etc. If it was a CCR visual issue I'd gladly lay panels more to the horizontal so as not to be seen and hose them off for 5 minutes as needed, maybe 3 or 4 times a year. They'd be highly productive, especially during the summer months when needed most.

[J.P.M.]

JPM - thanks, you're generally stating the obvious, but many of the homes in N.Scottsdale have roof access, used as patio's, for telescopes, etc. If it was a CCR visual issue I'd gladly lay panels more to the horizontal so as not to be seen and hose them off for 5 minutes as needed, maybe 3 or 4 times a year. They'd be highly productive, especially during the summer months when needed most.

You're quite welcome. Suggest you run PVWatts two ways: one horizontal. and one at 20 deg. to the horiz. and face south, and compare annual output and est. savings. Next, before you buy anything, put a small lite of single pane glass on a horizontal surface where the panels might be and see what happens to it as an experiment.

[Ian S]

JPM - thanks, you're generally stating the obvious, but many of the homes in N.Scottsdale have roof access, used as patio's, for telescopes, etc. If it was a CCR visual issue I'd gladly lay panels more to the horizontal so as not to be seen and hose them off for 5 minutes as needed, maybe 3 or 4 times a year. They'd be highly productive, especially during the summer months when needed most.

Many flat roof installations here use a shallower angle than the standard rule of thumb for the latitude. This reduces annual production a bit but increases summer production when the electric rates are highest. For example, mine are at a 15 deg. angle. The law in Arizona, unlike the utilities, favors rooftop solar and most attempts to restrict solar by CC&Rs and such have been rendered inoperative.

[Willaby]

Many flat roof installations here use a shallower angle than the standard rule of thumb for the latitude. This reduces annual production a bit but increases summer production when the electric rates are highest. For example, mine are at a 15 deg. angle. The law in Arizona, unlike the utilities, favors rooftop solar and most attempts to restrict solar by CC&Rs and such have been rendered inoperative.

Makes sense. The summer production difference between 15 degrees tilt and 0 wouldn't be much at all. Winter certainly would, but I recall summer bills were more than 2x as high. Not sure where I'd heard the CCR's had more power there, probably a Real Estate that didn't like visible solar (there are a few in Scottsdale), but glad state law over-rides.

[J.P.M.]

Many flat roof installations here use a shallower angle than the standard rule of thumb for the latitude. This reduces annual production a bit but increases summer production when the electric rates are highest. For example, mine are at a 15 deg. angle. The law in Arizona, unlike the utilities, favors rooftop solar and most attempts to restrict solar by CC&Rs and such have been rendered inoperative.

I'd think PVWatts would add a bit on qualitative information to the production estimates. I suggested 20 deg. south facing only as a comparison to horizontal for production differences.

[azdave]

Thanks for posting Ian S.

I missed that article in the AZ Republic but good to know some realtors are recognizing the value solar can add to a property in some situations. I had my home appraised for a refi recently. The appraiser did not know how to handle it so he did not assign any value plus or minus to the appraisal.

Just to make a point, I argued that my fully owned and paid for grid-tie system would save at least $1300-$1400 per year in electricity compared to the non-solar comp homes in the appraisal. That should certainly have some value to anyone who pays a utility bill every month. They either didn't care or didn't want to commit to making a judgement about it. I also noted that the panels were not a visual distraction either. You can't see the panels from the front of the house and the neighbors can barely see them from thier back yards either so it wasn't an eyesore issue.

I consider myself very fortunate to have just made it into the system before SRP changed the rules for solar customers. I'm grandfathered for 19 more years and the contract is fully transferable to a new owner so my solar install should definitely be a selling point if I ever choose to move.

Do you see 26 panels in action?

[mrdeath2000]

Care to post the appraisal companies name? I plan on Refing next year and if they don't know jack about solar I don't want to use them.

Isn't appraising their job?... If the appraisal came back lower than you needed I would light them up on the phone about sending someone competent to do their job. Would they send someone who looked at a pool and said, "I don't know much about pools, so I wont count that."