From Sunshine to Electricity

  1. The sun sends bursts of energy called photons into space
  2. The photons travel to Earth and hit a magnetic field on a solar cell on the solar panel
  3. Electrons create an electrical current
  4. The current from every cell on every solar panel combine and leave the system

Source: Department of Energy

Solar power is nothing new here in Texas. The state first offered a Renewable Energy Systems Property Tax Exemption back in 1981.

During the last 10 years, significant solar generation has been added through public and private installations. More than 18,000 megawatts (MW) of solar panels have come online—enough to power roughly 2.1 million homes, according to the Solar Energy Industries Association. A projected 40,000 additional MW may be installed in the next five years.

The more solar panels around the state, the more likely you’ll encounter them in your real estate business. Your buyer and seller clients may have questions, and previous clients may contact you about real estate implications when considering installing an array. A transaction may include them. You will have to know what you’re talking about or refer people to someone who does.

Candy Cooke is a certified general appraiser with Real Property Counselors in Round Rock. The two-time Texas REALTORS® Educator of the Year teaches the course Solar Panels and the Real Estate Transaction.

Cooke notes that solar panels can lower energy bills, sometimes by large amounts. Solar arrays with storage capacity can allow homeowners to keep some of the power they generate and not be fully dependent on energy providers. Solar-capable homes can present a unique marketing opportunity, since some consumers consider the fixtures desirable, Cooke says.

But solar power is not as simple as attaching a few panels to a roof and waiting for the savings to roll in. Your buyer clients should understand the full picture of the system they’re considering. Your seller clients should know about potential hurdles when selling their property.

Future Expansion?

Utility-scale solar panel installations are large solar arrays, often on the ground, that typically generate 1 to 5 megawatts. More than 72,000 MW of utility-scale solar capacity was under study in the Electric Reliability Council of Texas (ERCOT) region in 2020. “While it is unlikely all of these projects will get built, the recent uptick in solar interconnection requests may be due to declining technology costs and significant solar opportunities in West Texas,” ERCOT says.

Here’s the scope of installations being considered around the state:

  • 26,011 MW – West Texas
  • 17,888 MW – North Texas
  • 17,086 MW – South Texas
  • 5,567 MW – Coastal Texas
  • 3,654 MW – the Panhandle
  • 1,985 MW – Houston

For comparison, residential installations are much smaller. The average solar panel can produce about 250-400 watts of power. It would take about 27 panels to generate 1,000 kilowatt hours a month.

Sources: EnergySage, ERCOT

Helping buyer clients with solar

The first way you can help buyers who want a home with solar panels is to check your MLS. Some MLSs allow agents to search available properties with solar panels, Cooke says.

Cooke recommends that buyers get all of the information they can on a system before purchasing. “They need to know what it’s going to cost. Are there any downsides the seller knows about? Is there anything they need to be concerned about?”

Suggest that your buyer clients ask who owns the array. Panels can be bought and installed outright but are often leased or financed. Buyer clients should ask the seller about the terms of their solar array loan or lease and whether it is possible to take over a lease, Cooke adds. It might not be.

Buyers should also ask to see the contract that allows the homeowner to sell power to the energy grid. Each utility provider does things a little differently, and contracts are periodically renegotiated. If a buyer is counting on selling solar energy to the grid, it’s important to make sure the utility company is willing and able to buy the energy. “Make sure those promises are locked in, and know what’s being promised,” Cooke advises.

Buyers who own their solar panels outright should also be aware of potential maintenance costs. Solar panels have long warranties and are often touted for their durability. “Solar panels are incredibly durable and require little to no maintenance over their productive lifetime, which can span 25 years or more,” says clean-energy marketplace EnergySage. However, large hail can damage solar panels. Leased solar panels will be repaired and maintained by the leasing company.

Buyers should know that they’ll need to remove and reattach the panels to complete any roof repairs, Cooke says.

Questions for Homeowners Considering Adding Solar

Does your house face the right direction? “Everyone thinks we’re getting hours and hours of sunshine a day, but it doesn’t work like that when it comes to solar panels,” Cooke says. “Panels generate energy based on full sun exposure. You may only average six hours a day of that.”

Is anything blocking the panels? Are there any trees in the way? Weather and seasons matter when it comes to generating electricity using solar panels.

Is the roof a good fit for solar panels? Is there enough flat space for the panels?

Battery or no battery? Storage capacity can increase an array’s cost by tens of thousands of dollars but allows homeowners the opportunity to keep some of the electricity they generate for use during less productive times. When Winter Storm Uri knocked out power in mid-February 2021, the only solar systems that provided emergency power were the ones with storage capacity, Cooke says.

Is this a good price? Advise your clients to shop around before choosing a solar provider. One salesman could offer an array for $20,000, and another could offer the same array for $50,000 to the same homeowner.

How large of an array is appropriate? Bigger is not always better, Cooke explains. Solar panel systems should be purchased based on the home’s electrical usage. Experts can help your clients determine what is the most appropriate size of array for their home and situation.

What is off-grid?

Off-grid commonly means the home is not attached to a public utility or power grid in any way. Any electricity the home needs is generated by solar power collected by the solar panels and often stored in batteries. This is sometimes paired with other off-grid strategies such as rain catchment or wind power. Most homes with solar panels are not fully off-grid; homeowners use solar to lower their energy bills by selling energy to utilities.

Helping seller clients with solar

The first task for homeowners selling houses with solar panels is to gather all relevant documentation, such as the number of panels, installation date, technology specifications, energy output, and contracts with energy providers. Appraisers can use an Appraisal Institute form, Residential Green and Energy Efficient Addendum, to document a solar array’s features.

Seller clients shouldn’t assume the panels will increase their property values, Cooke warns. If the panels are leased, they are considered personal property and can’t be factored into appraisals.

Appraisers have a tough time with solar panels, according to Cooke. Lenders want to know that if a borrower defaults, the lender can sell the home to someone else and get their money back. That’s why lenders want to know the value of properties. Lenders may not be willing to loan money to cover costs associated with solar panels.

Cooke has seen situations such as a buyer being approved for a $300,000 home but not for the $40,000 solar array attached to it. Typically, the deal falls through unless the seller can pay off the solar lien at closing or, in some cases, dismantle the solar array.

Homebuyer opinions of solar panels run the gamut. “Some people are totally into solar energy, and others could care less,” Cooke says. Most consumers consider solar panels a perk but are unwilling to pay more for a house that includes them, she adds. Highlighting an array in your marketing will draw the most enthusiastic solar supporters.

Solar In Texas

  • 17,713 MW of utility-scale installed solar, as of July 2023
  • 13,086 MW record for solar generation (June 25, 2023)
  • Expected to generate 11% of Texas’s capacity in 2023
  • Solar has generated 7.02% YTD (Jan-June 2023) or 14,326 MWh
  • 1 megawatt of electricity can power about 200 homes during peak demand
  • Peak electrical demand for the state: 80,828 MW on June 27

Source: Electric Reliability Council of Texas (ERCOT)

Current owners considering adding future panels

Solar arrays are a good fit when the homes are well positioned to generate electricity and the buyers plan to stay in the home for a long time, Cooke explains. Solar energy is a long-term investment for homeowners.

Installing a 5 kW solar panel system in Texas averages $13,600 but ranges from $11,560 to $15,640, according to EnergySage. The federal government offers a 30% investment tax credit that drops the average price to around $9,520. It typically takes about a decade for a homeowner to pay back the initial investment of installing solar. A solar array can produce thousands of dollars in savings over a 20-year period.

EnergySage notes that many factors can influence the cost of an array: size, panel brand and quality, roof dimensions, and the installation company, among others.

Cooke encourages homeowners who are curious about solar panels to check the math to ensure the array is a good investment. “You calculate how long it takes to pay off by taking your total cost (purchase price, lien, or lease minus tax credits) and divide that by your projected annual savings. That’s an estimate of how many years it will take to break even.

I had a client who did the math and discovered it would take 26 years to pay off. He wasn’t generating enough electricity and wasn’t saving enough money.”

Homeowners should not assume their solar panels will eliminate their electrical bills, Cooke says. In months with lots of full-sun exposure, homeowners can see significant savings. In months with less sunshine, they may see different results. “In the good months, sure. You’ll hear people say my bill was only $5,” she says. It’s even possible to get credits if you generate more electricity than you use, says EnergySage.

Cooke advises agents to learn more. “Build up some networking and reach out to people you can talk to. Ask questions. Understand how it really works.”