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Appraisal of Renewable Energy System

Discussion in 'Environmental Discussion' started by jimnjo, May 27, 2009.

  1. jimnjo

    jimnjo Member

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    We are considering sale of our off grid homestead and need advice on setting value. A property appraiser is doing the 'conventional' stuff - land, buildings - but has no experience with renewables.

    We have a 500 watt solar array:

    Various solar panels, aged from 2 to 15 years.

    1 year old Prosine 2.0 inverter

    Wind:

    2 year old Whisper 100 wind turbine on 3 year old 95 foot tower.

    All accessories, including charge control, metering, older batteries, elderly Onan generator. System built originally in 1988, but upgraded as indicated above.

    Not interested in selling components, but rather needing to provide the appraiser with a value 'in place.'

    Thoughts?

    Jim Sluyter, Five Springs Farm
     
  2. icarus

    icarus Senior Member

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    Im sorry to say that I think the added value is close to zero. 500 watt PV array retail would be worth maybe $1000 as used hardware. The Prosine (I can't remember if that is a MSW inverter) might be worth $250. The small scale wind has no value. (on sober second thought,, after re-reading your OP,,,the whisper probably has some value,,, mostly since it is on a 90' tower. Most people are very unhappy with small scale wind as the headache factor usually outweighs the benefit). The Onan has little value.

    As you well know, with an off grid solar system, one significant cost is the battery bank,, and unless the batteries are brand new they also have no value.

    The value is really what someone is willing to pay for it. Grid tie system might add ~$3-5 a watt. One of the problems is that the price of PV solar is going down on a component basis. Another is the age of your hardware (even though you know it works well) The final issue is that most people want to be able to pull the switch and have 24/7 lights.

    You might make the case that the whole system be valued at ~$1-2000. In the real world if the property is worth say $100k with the buildings/improvements, the $1-2k might be reasonable. Ask yourself the question,,, what would you pay with the RE systems and what would you pay without them?

    As for my Bona fides,,, I design and build small scale off grid solar installations,,, and live off grid much of the year.
    For more information,, you might post the same question here: Solar Electric Discussion Forum by Northern Arizona Wind & Sun - Powered by vBulletin

    Icarus
     
  3. hill

    hill High Fiber Member

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    Here's the REAL pisser. My wife is on the board of the O.C. Board of Realtors, so we deal w/ this too often. 99.9% of realty appraisers no NOTHING about PV values, and will thus rate even a 7Kwh system that cost $50,000 ... even if it's brand new, at only $3,000. And what with new banking reg's ... don't even TRY to get another appraisal, or to get the existing one to reconsider. Many PV contractors will boast, "this'll ad a huge amount to your home's value". It just aint true.
     
  4. jimnjo

    jimnjo Member

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    ,,,The value is really what someone is willing to pay for it. ...

    That is, of course, the crux of the matter.

    We recognize the unique nature of the off grid system and lifestyle and would market the place via RE publications (like Home Power) and agriculture publications (since our small farm has some notoriety as a result of publications we have been featured in, and produced ourselves). That does, however, limit potential buyers severely and we also recognize the possibility that we will end up selling, if indeed we decide to sell, to someone who is interested primarily, or perhaps only in the unique property (proximity to Lake Michigan, springs on land, and so on).

    Our hope is to place some reasonable value on the in-place systems for someone who would take it on.

    BTW, Prosine is sine wave inverter, and the 5-year old golf cart batteries are admittedly on their last legs.

    Thanks for the pointer to Wind & Sun, an outfit I had lost track of.

    Jim
     
  5. hill

    hill High Fiber Member

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    eh, no. Let me fix it with just 3 extra words. The value is really what someone WITH CASH is willing to pay for it. You see, if the price is $50,000 higher than the tight fisted appraiser says, than the bank won't give you a loan. So if your buyer doesn't have cash, take the PV system with you.

    .
     
  6. icarus

    icarus Senior Member

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    The point here is that we aren't talking very big money here.

    A .5 kw grid tie system (if you could even build one that small) might cost $10 watt, installed.. Probably closer to $8. Depreciated value wouldn't be more than the component value,,, Panels @$1-2/watt,, ($5-1000)inverter maybe $500, generator almost no value,,, Wind genny and tower ~$1000 leaving a total value of under $2000, and that is optimistic.


    The real issue is how to appraise off grid houses in any market. IF they are recreational property it is marginally easier. Full time,, it would seem that you would actually DEVALUE the property as the pool of potential buyers is considerably smaller, making the property less valuable in most cases.

    In the rare case of an off grid house that is built with a well thought out system that functions like a "real", with ease and convenience then the appraisal might,, IMHO, be neutral at best. The system is question is too small to be considered a "real" system.

    Not counting the wind component which I can't comment on,, and is subject to wild fluctuations due to weather AND reliabilty, here is my take on what this system will generate. My down and dirty rule of thumb is that the amount of electricity you can get out of an off grid system, calculating all efficiencies is ~50% of name plate multiplied by the number of hours of good sun. So I would take the 500 watts X .5 system loses X 4 hours of good sun average making ~1kw per day. More in the summer possibly less in the summer. Even considering the extreme conservation we practice in our small off grid house (we use ~.6 kw/day) few people would consider being able to use ~1kw/day to be "normal" More likely at least 4 times that,, probably more.

    Icarus
    Icarus
     
  7. Celtic Blue

    Celtic Blue New Member

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    hill,

    To be fair, California's housing prices were ridiculous compared with most of the country. And ridiculous appraisals in CA/elsewhere were a key component of this multi-trillion dollar fiasco. Until the prices fall well below replacement cost, they are overpriced in this environment. All that is left after replacement structure cost is land/location value...and that ain't much in a massively depressed market. And the idea that much of the dirt around there is worth something like a million dollars an acre is what got many into this mess. California/Nevada/Arizona/Florida real estate values have been a prime example of Greater Fool Theory playing to conclusion.

    As for the appraisals, I had a neighbor in Georgia selling in 2007 when the wheels were just coming off, but no major failures had yet occurred and few people accepted what was coming. This was an area that was an older stable neighborhood with the best elementary school in the area. The prices there were quite moderate (about $80-90/sq. ft.) and the seller's price was reasonable, but the buyer had trouble because of the appraisal. My neighbor had to drop the price to make it go through. While the neighbor complained about the appraiser from what I saw the appraiser was spot on with a conservative estimate in a declining market. As you pointed out, cash was the key limitation. While both parties would have been happy at the original price, banks weren't willing to take the loan underwriting risk. The appraiser was correctly reading the trend, as was the bank. And this was in an uninflated market...
     
  8. burritos

    burritos Senior Member

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    Here's a secondary question. What would a PV system be worth to someone who is renting? I'm considering turning my house to a rental while I move to another new home. I have a 3.3 KW system. Could I arguably use that to entice renters, perhaps even charge more?
     
  9. icarus

    icarus Senior Member

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    Denis,

    I doubt,,,

    I suppose you could get as much more rent as the system supplies over normal,,, and I suppose you could find some 'green' folks that would love the idea of being green,, but I doubt they would pay much for the privilege.

    Icarus
     
  10. Celtic Blue

    Celtic Blue New Member

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    Screen your renters very, very carefully. Many landlords neglect to do this and get stuck with deadbeats. Way too many renters skip out in serial fashion...wouldn't surprise me if one skipped out with your PV system.

    The value of the PV system to the renter is only in how much you can show them it will reduce their electrical bill. So if you could show them they were going to save $100/month and were only going to charge them an extra $50 for the PV being in place, it might be appealing to them. Otherwise, at the same price it just might rent more quickly/easily than a comparable home without.
     
  11. jimnjo

    jimnjo Member

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    Consider, too, whether renters will treat the system well. If, as is the case with our (admittedly smaller) system, there are conservation measures that are important to system health, you will need renters with the interest and ability to do that.

    Jim