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The effect of residential solar photovoltaic systems on home value: A case study of Hawai‘i

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  • Wee, Sherilyn

Abstract

An investment in solar photovoltaic (PV) is considered a home improvement, and should be reflected in home sales prices. However, uncertainty about PV policies and information asymmetries may result in an imperfect pass-through. Hawai‘i serves as an illustrative case study to assess the impact of PV on home prices because Hawai‘i has the highest number of PV installations per capita nationwide. Applying a hedonic pricing model using home resale and PV building permit data from 2000 to 2013 for Oʻahu, I find that the presence of PV adds on average 5.4% to the value of a home. The value of PV exceeds total average installed costs because many of Hawai‘i's electricity circuits have reached legal limits for PV installations and thus many neighborhoods could technically no longer install additional PV capacity. Therefore, the value of the system goes beyond its capital investment—on average, by $5000—to incorporate expected electricity savings.

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  • Wee, Sherilyn, 2016. "The effect of residential solar photovoltaic systems on home value: A case study of Hawai‘i," Renewable Energy, Elsevier, vol. 91(C), pages 282-292.
    • Handle: RePEc:eee:renene:v:91:y:2016:i:c:p:282-292
    DOI: 10.1016/j.renene.2016.01.059
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    8. 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.
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    More about this item

    Keywords

    Solar photovoltaic; Real estate prices; Hedonic pricing model;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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