A small, solar electric system can run a homeowner around $26,000.
Public grants can cover about $10,000 of the construction cost, but homeowners are on the hook for the rest because banks don’t lend money to build solar panels, said Tim O’Brien, president of Tim O’Brien Homes Inc., Waukesha.
“With today’s credit market and lending restrictions, it’s a lot tougher to get this stuff in,” he said, “especially when nobody in the banking world and the appraising world is going to reach out and assign a value to it.”
Before assigning a value, appraisers want to see if a house with solar panels sells for more money than a comparable home without panels, O’Brien said. But if new homes are built without solar panels because banks will not lend the money for installation, appraisers have no way of determining if the panels add to the sale price of the homes, he said.
It’s a vicious cycle prompting prospective homeowners to cut energy-efficiency systems from home plans, O’Brien said.
The city of Milwaukee is trying to break the cycle with loans to homeowners for installation of residential solar panels. Borrowers would pay off the debt through an additional fee on their property tax bills.
If approved by the Common Council and mayor, the city loan program would start with $150,000 from a federal grant and give loans of up to $20,000 per project, said Alderman Tony Zielinski, the main sponsor of the plan.
“There’s a good chance a bank won’t even give them a loan for this,” Zielinski said of the solar projects.
The panels eventually will gain more value on the market, but now they are new and unproven, said Paul Vozar, president of Vozar Appraisal Service Inc., West Allis. To make matters worse, he said, not many houses are selling in Milwaukee, regardless of whether they have panels.
“A lot of – lot of – sales aren’t out there right now,” Vozar said, “so we’re kind of struggling with that.”
That problem is hamstringing O’Brien, who is trying to include solar panels on the houses he builds. Programs such as Zielinski’s would help break the logjam by putting more houses on the market with solar panels, O’Brien said.
He said his company started offering loans for the panels because banks won’t, and he wants the panels installed on houses because he makes a profit from installing the panels just as he would from any other component that adds to a home’s construction cost.
“The key is awareness and getting it out there so people can see it,” he said. “It’s definitely not something we can retire off of.”