Accessory dwelling units (ADU), in-law apartments, laneway houses, backyard cottages, or just a good ol’ fashion granny flat — the home addition goes by many names, but one thing that remains standard throughout the nation is that building one with solar, makes a lot of sense.
That’s because residential solar and ADUs go together like peanut butter and jelly.
Take, for example, that the reason why the majority of people build ADUs is to provide an independent living provision for all of life’s necessities. ADUs act a self-reliant tiny home that is detached from a primary dwelling, but still on the same parcel of land, which can accommodate a person’s sleeping, cooking, and sanitation needs. Since land is usually the most expensive part of building a home, and the land costs of an ADU are already accounted for, each dollar spent building the unit has a direct Return On Investment (ROI) when generating additional rental income and is a great way to build passive income over time.
Likewise, homeowners that install solar systems do so with the intent to gain independence from utility companies and take control of their electric bills. Much like an ADU, the addition of solar to a home will increase its value and can be viewed as a long-term investment, generating a net-positive ROI after the first 5-7 years it’s installed.
When it comes to do-it-yourself projects, again, both residential solar and ADUs attract the same type of go-getter. It might not come as a surprise to learn that both projects can be completed on or off the radar. To encourage more builds of both that are up to code, many municipalities around the nation have made them easier to install, rolling back legislation to address the housing and energy crisis. Nationally, Los Angeles was among the cities that saw the most dramatic jump in ADUs after changing its building code from 80 applications in 2016 to 1,970 in 2017.
Legislation has had a positive impact on residential solar installments, too. The federal Solar Investment Tax Credit (ITC) has increased solar installations by 1600 percent since it was initiated in 2006, giving homeowners a generous 30 percent back on the price of their systems. Starting 2020 the ITC will begin to roll back its credit to 26 percent and 22 percent in 2021, before dropping to zero.
Coupled with the sunsetting ITC, 2019 promises to be the most financially beneficial time in the foreseeable future for homeowners to start ADU and solar projects. The symbiotic duo is an undeniably beneficial investment.