Solar Myth Busted! ‘It takes years for Solar to Pay’
Posted in Blog
Solar Investment has Immediate Payoff on Property Value
Studies have shown that there is an immediate payoff from Solar investment from the increase in resale value of your home. We explain the myth that ‘It takes years for Solar to pay off’ is just an urban myth of the dark ages.
Solar means having your cake and eating it too
The increased resale value on top of the direct monthly power bill savings means you get the best of both worlds and can have your cake and eat it too. Yum!
One common myth we hear often is that ‘It takes years for Solar to pay off’. This is often heard from our weathered statespeople, who think solar is great but best suited for the younger generation rather than themselves. Let’s dig deeper into how Solar has an immediate boost to your property resale value.
Yes, there is an up-front cost to Solar for your home. Yes, if you have aimed to save 40% of your power bill through solar, the savings are drip fed over time (Solar is not a ‘get rich quick’ scheme!). What solar is, from an investment perspective, a slow burner with a twist. Let’s explain.
Let’s say you have a $10,600 outlay on a 4 kWh system (a large system, but designed to save 40+% on power for an average household). The estimated monthly savings vary from $90 in summer to $60 in winter. Over the year, this totals $945 for year 1, eventually saving $1,590in year 25 => giving over $30,000 in returns over 25 years. This saving is what we call the ‘direct benefit’ of solar - where the homeowner receives the whole of life savings directly through their power bills.
Now I can hear you saying ‘That’s an 11 year payback - I won’t see the benefits from my investment myself!' Au contraire!
Enter the indirect benefit - our little (big) twist in the Solar investment decision equation. You see those $30,000 savings (over the life of the system) now get ‘baked in’ to your property’s resale value. Such property improvements are now being clearly identified and recognised by purchasing parties through price premiums come time to sell your home. These astute purchasers know the benefit of the Solar utility, and are willing to pay for it accordingly. While not dollar for dollar exactly, the day after your system goes live, you have directly improved the value of your home. When compared to say, a pool for your property, buyers know that each month they will enjoy power bill savings (rather than paying for pool upkeep - not that we’re against a midsummer dip at home!). Simply, Solar powered homes will increase the value of your home - this is the indirect benefit of investing in Solar. We can happily say the investment in Solar is recovered if you decide to sell your home.
The proof is found in this USA study, where researchers at the National Bureau of Economic Research found a new property’s gain on solar adding over $20,000 (USD) to the sale value. This lines up nicely with our example above (using an exchange rate of 0.66 - November 2020). More here.
What this study also tells us is the obvious - that the bigger the system, the larger the savings and therefore property value gains.
While most studies to date focus on the USA, the fundamentals still apply here in New Zealand. That is, modern home buyers of all ages are paying a premium for Solar which represents the economic, environmental and lifestyle benefits they receive from your foresight. We can’t wait for a New Zealand study to prove the same for Kiwi homes, but in the meantime, Kiwis can enjoy the immediate returns on investment by connecting with Clean Energy Partners today.
There you have it - Solar Myth busted! Our proof hasn’t blown up any cars, but the worked example clearly illustrates the slow burning gains accumulate over time, adding immediate value to your home at the same time - all backed with hard research. So don’t let impending downsizing, upsizing or retirement get in the way of your solar decision - save with Solar today.