It's easy to list the many benefits of commercial solar power to businesses, but quantifying their value can be more difficult. The impact on property value is a prime example. While it is likely true that a building equipped with high quality commercial real estate solar panels is more valuable than a fossil fuel based asset, determining exactly how much more valuable it can be can be complicated. If higher property value is a major factor in your business to justify the cost of commercial solar panels, this article can help.
First, let's take a quick look at non-commercial residential solar systems. A study conducted by Zillow found that homes with solar panels sell 4.1% more than comparable homes without solar panels. While some reports suggest a similar correlation for evaluating commercial property, not enough studies have been conducted to verify comparable results for commercial property. Still, the general lesson is obvious: adding solar energy can increase the selling price of a property.
The specific impact of solar energy on commercial property value largely depends on the answer to each of the following questions:
Does the organization installing solar energy own the building / land for the project? As can be expected, the greatest potential added value arises when the organization using commercial solar power owns the location and the solar system to be installed. By purchasing the commercial solar equipment directly, owners gain access to potential tax incentives, reduced energy costs, and the potential to receive renewable energy credits (as well as the opportunity to promote the green properties of their solar system). An increased value of commercial real estate is also part of this list of services.
How does a rental property offer the benefits of commercial solar? Many organizations rent out their commercial facilities, but that doesn't mean they can't benefit from it too. Most of the property's costs (e.g. insurance, property tax, utilities) are paid for by the tenant (or flow through to them in the form of a higher rent). Installing commercial solar could lower the energy bills the tenant would have to pay and allow them to benefit from positive public perception by having solar on their location.
What is the added value for property owners who provide tenants with solar energy? Here are some benefits tenants can take advantage of when trying to convince a landlord to install commercial solar systems:
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Tenants with lower utility bills may be happier and willing to stay longer, reducing the time and expense involved in finding new tenants.
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Properly structured PPAs or solar leases can potentially transfer to new tenants if the original tenant leaves the company, making the property more attractive to potential commercial tenants.
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Properties with a solar system could also benefit from the fact that more and more companies are taking corporate social responsibility seriously.
Are there “softer” advantages of solar operation that ultimately have an indirect effect on the property's value? Another less obvious, but notable, consideration is the fact that few things say “environmental awareness”, “social responsibility” and “advanced thinking” like visible commercial solar panels. A commercial solar system not only improves the public image, it also provides all of the benefits and cost savings of green operation while updating the appearance of a building. In general, better looking properties lead to increased property values.
In summary, property value should be considered when evaluating the pros and cons of commercial solar energy. To find out more and begin your journey towards solar, fill out our contact form.