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Capitalisation of residential solar photovoltaic systems in Western Australia

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  • Chunbo Ma
  • Maksym Polyakov
  • Ram Pandit

Abstract

type="main" xml:id="ajar12126-abs-0001"> Due to government financial incentives and falling prices of photovoltaic (PV) systems, solar power has become the fastest growing renewable energy source in Australia. As financial incentives are being reduced or phased out, there is a possibility that adoption of this technology will slow down, thus creating a need for improved policy instruments targeted at adoption of residential PV systems. One of the factors affecting adoption of solar technology in the residential sector is its capitalisation in property values. Yet, the awareness of the capitalisation of PV investments in the Australian property market is limited. Our data indicate that homeowners who anticipate selling their properties in the near future are reluctant to adopt PV systems. This paper presents the first empirical estimate of the property price premiums associated with residential solar PV systems in Australia using residential property sales data from the Perth metropolitan area of Western Australia. An estimated 2.3–3.2 per cent property price premium associated with the PV systems suggests that homeowners fully recover the costs of PV investments upon the sale of their properties. Effective government policy could use this information to encourage adoption of residential PV systems by homeowners.

Suggested Citation

  • Chunbo Ma & Maksym Polyakov & Ram Pandit, 2016. "Capitalisation of residential solar photovoltaic systems in Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), pages 366-385, July.
    • Handle: RePEc:bla:ajarec:v:60:y:2016:i:3:p:366-385
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    File URL: http://hdl.handle.net/10.1111/ajar.2016.60.issue-3
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    Cited by:

    1. Roberts, M.B. & Bruce, A. & MacGill, I., 2019. "Opportunities and barriers for photovoltaics on multi-unit residential buildings: Reviewing the Australian experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 95-110.
    2. Lan, Haifeng & Gou, Zhonghua & Yang, Linchuan, 2020. "House price premium associated with residential solar photovoltaics and the effect from feed-in tariffs: A case study of Southport in Queensland, Australia," Renewable Energy, Elsevier, vol. 161(C), pages 907-916.
    3. Boroomandnia, Arezoo & Rismanchi, Behzad & Wu, Wenyan, 2022. "A review of micro hydro systems in urban areas: Opportunities and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    4. Grazier, Emma, 2022. "Beyond the Solar Home Price Premium: Solar as a Neighborhood Amenity," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322312, Agricultural and Applied Economics Association.
    5. Best, Rohan & Burke, Paul J. & Nepal, Rabindra & Reynolds, Zac, 2021. "Effects of rooftop solar on housing prices in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(03), January.
    6. Gillingham, Kenneth T. & Watten, Asa, 2024. "How is rooftop solar capitalized in home prices?," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    7. Best, Rohan, 2022. "Household wealth of tenants promotes their solar panel access," Economic Modelling, Elsevier, vol. 106(C).
    8. Best, Rohan & Trück, Stefan, 2020. "Capital and policy impacts on Australian small-scale solar installations," Energy Policy, Elsevier, vol. 136(C).

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