FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun
($35 x 12 months x 290,000 units) equals $121.8 million. But, is $8,400 the full system cost or merely the expense to be financed? At 6 percent interest over 20 years, the monthly expense for principal and interest is $60.18. That’s more than the $35 per month in projected utility savings. The total repayment expense over 20 years is $14,443 ($60.18 x 240 months). And that’s still not the full amount a buyer will pay. The instal- lation of a solar system may create additional costs. For instance, a system represents a property improvement, one which can result in a higher assessment and greater property taxes. Additionally, during the life of the system there can be expenses for maintenance, repairs, and cleaning.
happens if carrier underwriting policies simply don’t cover solar in- stallations. A homeowner who has recently installed solar might not be renewed or their policy could be canceled. In either case, the home- owner will have to get replacement coverage if they have financing because mortgage agreements require property insurance. CHANGING TECHNOLOGY Buying a solar system today locks in not only current instal- lation prices, but also current efficiencies. It’s like buying a terrific car in 1999 with the last payments due this year. Over time, solar systems tend to get more ef- ficient and thus relatively cheaper. SolarPowerRocks.com says a single
two percent lower than it was just a year ago, and solar panel system costs are continuing to fall.” Before tax credits, EnergySage reports that a six-kilowatt system will cost $18,300. In 2019, says the National Asso- ciation of Home Builders (NAHB), “a $1,000 increase in the median new home price would price 127,560 U.S. households out of the market. In other words, 127,560 households would qualify for the new home mortgage before the change, but not afterwards.” NAHB estimates that with each $1,000 price increase, California will have 9,897 households priced out of the market. If solar-enhanced prices rise by $8,400 then roughly 83,000 households will no longer see new construction as affordable. Many, no doubt, will stick with exist- ing homes, properties not required to have a solar installation. Meanwhile, watching with great interest, other jurisdictions are tracking the California experiment to see if they should follow suit. STATE-BACKED FINANCING It should come as no surprise that solar installers want to be paid for their work, a common desire among us all. What may be sur- prising is that the financing of solar
Property insurance costs can increase as well. Property insur- ance coverage is an issue which homeowners also need to check before any solar roof installation. Jason Vaughan with Affordable Home Insurance in Miramar Beach, FL., points out that insurance com- panies may or may not welcome rooftop solar installations. He said some installers require homeown- ers to have a $1 million liability policy in place before they will allow workers on the roof. Policy costs are also an issue. “When the system is installed,” says Vaughan, “it increases the cost to replace the home or property. So, an increase in premium would be likely and that increase would depend on the cost of the system.” Lastly, there’s the matter of what
In 2019, the average national solar panel cost is $3.05/watt. The average solar panel system size in the U.S. is approximately 6 kilowatts (kW), therefore an average solar panel system would cost $12,810 after tax credits. That’s more than two percent lower than it was just a year ago, and solar panel system costs are continuing to fall.” ENERGYSAGE.COM
solar panel typically produced 320 watts in 2018, up from 200 watts in 2010. In March 2019, SunPower (NASDAQ: SPWR) introduced a new series of solar panels that pro- duce as much as 415 watts, panels it claims are “the highest-power solar panels available today for the residential market.” Research from the National Renewable Energy Laboratory (NREL), part of the Energy Department, shows that in 2010 it cost $7.24 to install a watt of solar capacity, an expense which fell to $2.80 in 2017. Equally important, we may be on the verge of something new, using solar cells for more than electrical production. In Belgium, scientists have shown that it’s possible to manufacture hydrogen with a combination of solar panels and moisture, potentially a future source of residential heating as well as home-grown fuel for hydro- gen-powered vehicles. HOME SALES AND PRICING IMPACTS We don’t know how the California mandate will impact new home sales once it goes into effect. Some buyers will surely want to pay for the opportunity to have solar power. Some will not. Part of the
issue is that the mandate applies to all new homes, regardless of sale price. Presumably, the buyer of a $1.5 million property will be in a better position to buy a solar sys- tem than a purchaser who strug- gles to pay $200,000. It’s also unclear whether $8,400 will be the typical price. CNBC estimates that buyers will pay an average of $9,500 while The New York Times says the average price will range from $8,000 to $12,000. “In 2019, the average national solar panel cost is $3.05/watt,” according to EnergySage.com. “The average solar panel system size in the U.S is approximately 6 kilowatts (kW), therefore an average solar panel system would cost $12,810 after tax credits. That’s more than
PACE programs allow a property owner to finance the up front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment. The unique characteristic of PACE assessments is that the assessment is attached to the property rather than an individual.” ENERGY DEPARTMENT
8 think realty housing news report
may 2019 9
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