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									                        Solar System Appraisal Tool - User Guide
                                        Version 1.0, release date: 07/13/09

   This calculator has been designed to assist appraisers in determining the value of a solar electric
   system on new and existing homes in the Sacramento, CA area. Below you will find instructions
   on the proper use of this tool as well as other helpful information. Also, please be sure to enable
   excel macros prior to using this calculator.

1. Size of System - Please enter the size of the system to be valued. This system size should be
   expressed in kW(DC) and is sometimes referred to as the "nameplate" rating.
2. Utility Service Area of System - Please choose the utility provider this home receives its electricity
3. Is this a new home? - Please select whether or not this is an existing home or a new home. A
   "new" designation indicates that construction of this home was completed less than one year ago.
   For all other homes, please select "existing."
4. Net Purchase Price - If the home is new, please enter the net purchase price of the system. This
   should be calculated as the gross purchase price, less any utility or state rebates. Please do not
   factor in any applicable tax credits.
5. Years System has been in Operation - Please enter the number of full years that the system has
   been in operation. For example, if the system has been in service for 2 years and 4 months, you
   should select "2." For new homes, please select "0."
6. Square Footage of Home - Please select the square footage that most closely represents the size
   of the home where the system is located.
7. Expected annual production (kWh) - This is the default expected kWh production of the solar
   system in Year 1. It is based on a southwest facing system on a 5:12 roof in Sacramento, CA.

8. Expected output from PV Watts - If you would like to run your own solar production simulation
   instead of using the default calculation above, please follow the instructions below:
   Steps for using PV Watts:
     1. Click on the link to PV Watts, located at the bottom of this page.
     2. Please select "Sacramento" from the map.
     3. Please enter the system size, derate factor (use the default if you're unsure,)
        the roof pitch (array tilt) in degrees (there is a calculator below if you are
        unsure how to convert) and finally, system azimuth (orientation).
     4. Please enter the resulting annual AC Energy (kWh) into the appropriate cell.
9. Avoided Cost of Electricity - This field is automatically calculated based on the square footage and
    location of the system. However, if you would like to input a different cost of electricity, please
    enter it in the cell provided.
10. Discount Rate: The interest rate at which expected future cash flows can be discounted. For most
    homeowners, this rate should be equal to the interest rate of their mortgage.
11. Electricity Inflation Rate: This is the expected annual rate of increase for electricity prices in the
    selected utility territory. If the user does not input their own assumptions, the calculator will use a
    default rate of 4%.

Valuation Methodologies:
1. Comparable Market Price - This method values the system based on purchase prices of
   comparable, recently installed systems.

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2. Income Stream - This method values the system based on the Present Value of the expected
   future cash flows (income stream). These cash flows include electric bill savings and any applicable
   tax credits.
3. The Appraisal Journal - This method values the system based on 20C the first year electric savings,
   plus the estimated tax benefit (if the system is new).

Other Helpful Information

   Roof Pitch Converter           Select Roof Pitch                                      5/12
              A 5/12 roof pitch expressed as degrees is                                  22.62

   Link to PV Watts:

Major Assumptions

1. Consumption information for new homes in the Sacramento area is based on data from RLW
   Analytics, Inc.
2. It is assumed that the homeowner is eligible for a 30% Federal Tax Credit on the purchase of a
   new system. If a homeowner is not eligible for this tax credit, the calculations would be impacted
   Existing homes are assumed to consume 10% more electricity than newly constructed homes.
4. This calculator does not include financing considerations.
   This calculator has been specifically designed to assist in the appraisal of systems located in the
   Sacramento, CA area. It is not intended for and should not be used in other geographic locations.
6. Source for purchase prices used in Market Price valuation methodology: California Solar Initiative
   data, based on systems completed in 2009.
7. Source for The Appraisal Journal valuation methodology: "More Evidence of Rational Market
   Values for Home Energy Efficiency," The Appraisal Journal, October 1999.
8. These calculations assume an inverter replacement, at a cost of $1,500, in Year 15.

   The information contained in this calculator is for general information purposes only. The author
   of this tool has endeavored to keep the information up-to-date and correct, but it makes no
   representations or warranties of any kind, express or implied, about the completeness, accuracy,
   reliability, suitability for a particular purpose. By using this tool you agree that in no event will the
   author be liable for any loss or damage including without limitation, indirect or consequential loss
   or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or
   in connection with, the use of this tool. Any reliance you place on such information is therefore
   strictly at your own risk.


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Bob Lay
Robert Lay & Associates
Certified Residential Property Appraiser
Secretary, Board of Directors-REAA
Office: 916-608-4204
Fax: 916-608-4286
Cell: 916-761-4768

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                                                 Solar System Appraisal Tool

Description of Inputs                                       Inputs   Description of Valuation             Outputs
Size of subject system in kW(DC)
                                                                     Value of the System based on
Utility service area of system                                                                              $0
                                                                     Comparable Market Prices
Is this a new home or an existing home?
  - If system is new, please enter net purchase price
                                                                     Value of the System based on
Full years that subject system has been in operation                                                      #VALUE!
                                                                     Income Stream
Square footage of home
Expected annual production (kWh)
                                                                     Value of the System based on
-- Expected output calculated from PV Watts (if desired)                                                  #VALUE!
                                                                     The Appraisal Journal
Avoided cost of electricity based on home size
- To use use your own avoided cost, please enter it here
Discount rate                                               4.00%    Average of all 3 Appraisal Methods   #VALUE!
Electric inflation rate                                     4.00%

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