Conference Agenda

This paper estimates the effect of residential rooftop solar systems on housing sale prices in Delaware and examines heterogeneity across system attributes. We construct a novel property-level dataset by merging solar installation records, historical property characteristics, single-property transaction data, and renovation permit records. We employ both hedonic price and repeat-sales models to estimate the marginal impacts of solar on home sales prices. Our preliminary results indicate that homes sold with solar systems have an average price premium of approximately 7.6% ($22,379) when not controlling for recent home renovations, and 5.6% ($16,613) when controlling for them. These premiums are higher than the average installation cost of a solar system in Delaware, $14,781, with incentives. This suggests that, on average, solar is fully capitalized at the time of resale and recovers 112%-125% of solar cost. However, we observe that solar systems were fully capitalized when homes were sold within the first three years of installation, but that capitalization rates decline afterward. Accounting for discounting, this is in line with expectations. The solar value does not disappear with age; rather, it shifts from the capitalized resale value to realized electricity bill savings. We also found that homes with owned solar systems had a higher price premium than homes with leased solar systems.

Additionally, capitalization effects were greater in metropolitan areas than in non-metropolitan regions. The findings offer meaningful guidance for homeowners evaluating solar investments and for policymakers and solar market stakeholders in designing effective incentives and motivating homeowners to adopt solar. Given the low-penetration of solar in Delaware relative to other states (like California and Massachusetts) that have been the focus of previous studies, we also provide particular insights in areas with high potential for increased adoption.