According to research published by real estate firm, Jones Lang Lasalle (JLL) along with solar energy company Solarcentury, solar photovoltaic (PV) additions to commercial properties significantly increase values via additional streams of income such as through selling unused quantities of electricity to utility companies. The results of the report, Solar PV: Shedding light on the opportunities, stands on the findings that a historical lack of knowledge about PV technology has led to varied approaches in how to value it, leading to inconsistent understandings of PV assets. Additionally, even as the capabilities of solar panels have become more sophisticated, efficient and cost-effective, the inconsistencies in valuations have continued.
The study's authors maintain that the discounted cash flow method serves most accurately when approximating the value of PV installations, resulting in an explicit net present value calculation. Chris Strathon, director of valuation at JLL, praised the significance of the research as a pioneering effort in deducing the different approaches to valuing solar technology on commercial real estate and revealing how underused solar energy is by firms looking to augment the worth of their holdings.
"We believe rooftop solar on commercial property adds value by improving the marketability of a property to occupiers who are driven by cost or CSR objectives, and additional income which is received via power purchase agreements and government-backed tariffs," Strathon tells Energy Live News.
Frans van den Heuvel, CEO of Solarcentury, added that the growing popularity of solar technology is also leading to a greater interest in its effect on the valuation of property as "A new wave of leading brands are going solar — Sainsbury's, Google, Mars, IKEA and Apple among them — and this is undoubtedly stimulating the market."
The increased use of solar energy by major corporations, according to Solar Means Business, a publication by the Solar Energy Industries Association and the Vote Solar Initiative, also indicates the diversity of the initiative with fashion, retail, automotive and food service ranking as some of the leading sectors that have increased their solar energy usage. Rising energy costs and government incentives are two of the factors that have helped the solar energy sector move forward.
The residential sector has seen an upward shift in usage and value as well. In California, studies have shown some communities see increases in value by as much as 4 percent due to solar installations. Typically, areas where the price of electricity rates is higher than normal, along with states with attractive solar energy incentives, are the regions where solar energy has displayed the most prominent upward shifts in value on properties. With specific regard to commercial real estate, Solar Means Business 2013, published by the Solar Energy Industries Association (SEIA) and the Vote Solar Initiative (Vote Solar), ranked Prologis, Hartz Mountain Industries and Kimco as leading real estate developers and investment trusts in terms of maximizing empty roof space and raising property value with solar installations.
Nevertheless, some of the concerns that remain with solar installations include a need for greater understanding of the technology's capabilities, any legal ramifications that may come with installations in certain zones and management requisites of the assets.
With the discussion surrounding the effect of solar initiatives on the value of properties still ongoing, what can certainly be taken from this development is the complicated effects new technologies can have on valuations. Utilizing e2Value's straightforward online property appraisal services and replacement cost valuations offerings consistently provide data that you can rely on.