Vermont owners of solar homes could reap benefits at resale

Rutland Herald, Montpelier, VT, May 1, 2011

By Bruce Edwards

STAFF WRITER - Published: May 1, 2011

Sticker shock has hit consumers again with ever-higher energy prices, and costs are expected to climb even more this summer.

Consumers can trim their energy bills any number of ways: with fuel-efficient, even hybrid and now electric cars; energy-efficient appliances and lighting; and insulation for the home, among others.

But for homeowners who can make the investment, a net-metering photovoltaic system can pay off in a couple of ways. The systems can produce enough power on sunny days to meet a household’s everyday electrical needs while “banking” the excess to draw off the grid on cloudy days. The other, less talked-about benefit is that a solar net-metering system can add to the value of a home at resale.

A new federal study of California homes found that a 3,100-watt photovoltaic system installed on an existing home boosted the value of the home an average of $17,000 over homes without similar systems.

The research was conducted by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory.

Vermont is not California. The Green Mountain State has more than its share of cloudy days, which may give pause to someone considering investing thousands of dollars to save on their energy bill while reaping a premium when it comes time to sell their home.

Andrew Savage of AllEarth Renewables in Williston said that while Vermont has fewer sunny days than California, the difference isn’t significant.

“I would say that Vermont has more solar capacity than Germany, and Germany has a booming solar market,” said Savage, whose company designs and manufactures grid-connected GPS solar tracking systems for homes and businesses. He said that although it’s more expensive than a fixed solar system, the tracking system captures 40 percent to 45 percent more sun.

Rebates help

Terry Mitchell is no stranger to running a household on solar energy. With a solar-powered second home in the Northeast Kingdom, Mitchell and his wife decided they’d go solar when they built their new primary home in a remote area of Sudbury two years ago.

Unlike net-metering homes, which sell or bank excess capacity back to the power company, Mitchell’s solar home is off the grid. He said that for Central Vermont Public Service Corp. to run a line to his secluded 2,400-square-foot log home would have cost the couple $25,000. Instead, they invested $28,000 in a photovoltaic solar system with 16 solar panels, each 200 watts, attached to a pole behind the house, along with 16 deep cell batteries for storage. They also have a backup propane generator.

“We’re very efficient,” said Mitchell, who owns Mitchell Screen Printing & Embroidery in Pittsford. “We use all (compact fluorescent) lighting; we have a gas cook stove, a gas dryer. We use a propane wall-mount water heater that also runs our radiant heat throughout the entire home.”

While the upfront cost might be too much for the average homeowner, Mitchell said rebates cut the price.

“I think we ended up with $28,000 with everything,” Mitchell said, “but with all the federal rebates, I got almost a third of that back, so we were under $20,000 by the time it was all said and done.”

One thing that still irks Mitchell is that he was not eligible for state energy rebates. Mitchell said he didn’t qualify because the $400,000 home was not producing any power for the grid.

Lease to own

When David Murphy, of Montpelier, bought his home in 2005, he found that at $44,000 a solar system was just too expensive. But with a $1,000 down payment and a five-year lease, AllEarth Renewables installed a 3,100-watt system this year that is saving him money.

“We installed this in January and already my electric bill was way less than half, and we’re not even into the strong production months yet,” said Murphy, who added that his neighbors at first weren’t thrilled with the solar panel array.

Murphy heats his home mostly with wood and runs some of his appliances with gas.

Since most homes with a photovoltaic system are priced in the upper end of the housing market, saving energy and making a green commitment with a net-metering system may have too stiff a price tag for most homeowners or would-be homeowners in the state.

AllEarth Renewables sells and installs a 4,100-watt solar tracking system for $33,600. Alteris Renewables, a Vermont competitor, sells a 5,000-watt fixed solar system for $30,000.

Both companies offer financing and lease programs that bring down the cost, including federal and state tax credits, rebates and grants.

“You get down to about $16,000 when you utilize the state grant and the federal tax credit,” said Leigh Seddon, vice president of Alteris Renewables and the founder of SolarWorks of Vermont.

Those credits bring down the cost of an AllEarth Renewables system to $17,430.

AllEarth Renewables also offers a five-year power purchase agreement with the option of buying the system outright for the fair market value, which currently is $7,880.

Measuring value

Net metering was authorized by the Legislature in 1998. It requires electric utilities to allow customers to cut their electric bills by generating their own power using small-scale renewable energy systems. Excess power is fed back to their respective utilities and shows up as a credit when the system doesn’t generate enough electricity to power the home in any given month.

While the California study concluded that buyers pay a premium for existing solar homes, there is no corresponding data for Vermont.

“We’ve been trying to get the appraisers to quantify that,” said Robert Hill, executive vice president of the Vermont Association of Realtors.

Hill said the association is trying to collect enough data to quantify whether net-metering systems add to the price of a home. He said his best guess is that homes with such a system do command a premium.

“We believe it does, but the banks will only accept it if the appraiser says so,” he said.

Rutland appraiser Sean Sargeant has appraised five new homes, all with off-the-grid solar systems. The homes were valued at $400,000 to $600,000.

Sargeant also said more data need to be collected before concluding how much, if anything, a solar-powered home would command.

“The trouble is we don’t know what the market is going to do with any of those homes (at resale),” he said. “Will a second buyer coming in, will they accept that technology or will they want to replace it, or will they want to connect to the grid?”

High demand

The state Department of Public Service counts 1,204 solar photovoltaic systems that have received certificates of public good, with a total capacity of 9,989 kilowatts.

The state’s three largest electric utilities have a total of 1,100 net-metering customers (mostly solar). Central Vermont Public Service Corp. counts 525 customers, while Green Mountain Power Corp. has 409 customers. Of that latter number, 359 have signed on to the SolarGMP program, which pays net-metering customers a premium for the solar power produced.

Vermont Electric Cooperative has 166 such customers, including 56 awaiting a certificate of public good from the state Public Service Board.

Seddon, of Alteris, said the company has trouble keeping up with demand.

Alteris is also working with a nonprofit group.

“We are working with the Vermont Public Interest Research Group as part of their community solar program, where they’re out getting their members to put solar on their houses,” he said. “So, that has been a big boost to our sales and marketing.”

Ben Hoen, a researcher with the Lawrence Berkeley National Laboratory, said it’s safe to assume that Vermont homes outfitted with a photovoltaic system connected to the grid would bring a higher price.

“I think a premium is reasonable,” Hoen said. “The California study not only compared their premiums with the net installed cost of the system but also an estimate on the net present value of energy savings, both of which compared favorably.”

He said that between 2001 and 2009, the net cost to a California homeowner after federal and state rebates was $5 a watt or $15,000 for an installed system.

Hoen added that as the solar power system ages, the premium declines. He also said the premium was greater for existing homes in California with a solar system installed than newly built homes with similar systems. In explaining the difference, he said California homebuilders were likely trying to move new homes as quickly as possible and gave away or greatly discounted the value of the solar add-on.

He also said that homeowners who lease their solar systems are not likely to realize a premium when they sell their home until they own the system outright.

AllEarth Renewables has a mix of customers who buy the system outright or lease. For those who lease, Savage said the home value premium still applies. 

“If the power purchase agreement is such that it’s an attractive item … (a) rent-to-own system, it actually could add some value,” Savage said, adding that most of his customers are leasing to own.

Seddon said the resale premium on homes is greater in states with higher electric rates, like Connecticut. 

According to the Department of Energy study, approximately 2,100 megawatts of grid-connected photovoltaic power systems have been installed in the U.S. California is the largest market, with approximately 100,000 systems equal to 1,000 megawatts of installed capacity.

At the recent PV America Conference, Rhone Resch, president and CEO of the Solar Energy Industries Association, said the mid-Atlantic and Northeast region is now the largest market for photovoltaic systems in the country. Last year, Resch said, 878 megawatts of solar capacity was installed, more than double 2009. He said a combination of federal and state policies, completion of significant utility-scale projects, expansion of new state markets and declining manufacturing and installation costs drove the expansion.

bruce.edwards@rutlandherald.com

 

 

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