Photo: David TreboscOur recent podcast on “conspicuous conservation” looked at the “Prius Effect” — that is, how valuable it is for green-leaning consumers to signal their devotion to the environment by driving an obviously-hybrid Toyota Prius. (BTW, you can also fake it with an “instant hybrid conversion kit.”) The episode was based on an interesting paper by Alison and Steve Sexton called “Conspicuous Conservation: The Prius Effect and Willingness to Pay for Environmental Bona Fides.” It included some talk about solar panels as well, and how some people mount them on the street-facing side of their homes even though the sun shines more strongly on the rear.
Now there’s a new related paper called “Understanding the Solar Home Price Premium: Electricity Generation and ‘Green’ Social Status,” by Samuel Dastrup, Joshua S. Graff Zivin, Dora L. Costa, and Matthew E. Kahn. PDF is here; from the abstract:
This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels. Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect. Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium. This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.
One point that’s made in the podcast is that some very green communities (the Bay Area in Calif., e.g.), where solar panels are in high demand, aren’t very good locales for solar energy — whereas a less-green community like Bakersfield is super-sunny. We have a proposed solar-panel-swapping solution to that…
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People with large houses are more likely to be able to afford the front end investment cost associated with the solar cells and their installation.
This has been the same argument
Last month, I was in Phoenix, AZ for a week. The heat and sun were murderous. Very few houses have solar panels. I was disappointed and confused because it seems the perfect place to tap solar energy.
Yes, absolutely fair point you have made here. I’ve seen many a house with solar panels fixed to the “wrong sides” and it can’t be doing them any good. I think over the next few years we will start to see a very high demand for greener products and services though.
Nigel Zouch
pv solar installers
Texas
Since the Prius hybrid and the Honda Civic hybrid were introduced on the market all of the car reviews from car magazines, consumer reports, KBB ect, have favored the Prius. Might that be a bigger factor than green status? If I lived in a less sunny place than someone else it wouldn’t pay me back to install solar panels on their roof, not many people are that altruistic.
Alan Curtis