Solar panels: a sound investment for your home?
Generate your own electricity, and sell the excess back to the grid. There’s a lot to love about solar energy. It’s sustainable, cuts energy bills, reduces reliance on the grid, and runs on sunshine. But are the considerable upfront costs worth it?
A residential solar system is a big investment. In New Zealand, the average cost of installing solar panels is between $12,000 for seventeen 290W panels to $22,000 for twenty-eight 355W panels, according to Aeon Energy, an energy service specialist. You could end up paying much more when you factor in additional panels, oversized battery systems, and roof angles.
Think of the savings
You will slash your electricity bill, but it could take many years to claw back your initial investment. In one example published by Harrison’s Solar, the company’s most popular sized system for a standard Kiwi home costs $9,940 and delivers an estimated net power bill savings of $40,129 over the 25-year life of the system. That’s approximately $1,600 electricity savings per year. Bear in mind that calculations are based on shifting variables such as sunshine hours, electricity prices, and number of people in a home.
In another example, published on news website Stuff, Christchurch man Mike Walker last year spent $30,000 on a solar power system for his home, including 18 solar panels and an 18kwh battery system. He used the electricity to charge two electric vehicles, reducing his petrol bills from $140 per week to about $20 per week, and expected to save between $1,800 and $2,000 a year in electricity. At that rate he’d recover his initial outlay (including petrol costs) in around four years. Note that this calculation doesn’t include the cost of upgrading to electric vehicles.
What about house value?
Independent analysis of solar panels and their impact on home values isn’t readily available in this country. And while local installers are quick to highlight global studies confirming that buyers are willing to pay more for a property with solar panels, it is macro market forces that are likely to have the biggest impact on the future value of a home.
Nevertheless, some overseas experts suggest that home value increases around $20 for every $1 reduction in utility bills. In other words, if your solar energy system saves you $400 per year in electricity, you could expect to add $8,000 to capital value.
Research conducted in Australia estimates that the value of home is likely to increase by around $6,500 per kilowatt of solar energy.
Closer to home, Harrisons Solar teamed up with homes.co.nz to analyse thousands of homes to gauge the impact of installing a Harrisons Solar System on capital value.
Comparing houses sold after solar panels were installed with comparable sales in the area, the report found that, on average, Harrisons Solar increased the home’s selling price by 4.4% or $35,000. But they would say that – and who knows what unaccounted factors also had a bearing on value.
Yes or no?
Property owners in for the long haul should consider solar. It will be six-to-seven years (and possibly longer) before you break even, and money in the bank (or, at least, reduced power bills) after that.
In our assessment the jury is still out on whether capital gain can be directly attributed to a new solar system. But consider this: when a prospective buyer sees solar panels on a roof, their first thought is immediate power savings – without new investment. Who doesn’t like benefitting from someone else’s hard work and money. And that’s got to be worth something.
Call a Goodwins agent to get a practical perspective on solar power. Our property listings will indicate homes with solar systems. Call 0800 GOODWINS to see listed properties, or sign up to our buyer property alerts.