Most real estate agents and housing developers will tell you that solar-powered homes often outperform others in the market. Homeowners are increasingly interested in energy-efficient homes, and they’re willing to pay a premium for lower monthly utility costs. While the greater scientific community agrees that solar power systems help the planet, many homeowners still wonder: Will solar panels help my wallet and increase the value of my home?
The average residential solar energy system will produce power for more than 25 years, resulting in significant long-term savings. So how does that savings impact home value? With this article, we will use verified data to examine the impact of installing solar panels on the value of your home, and what factors go into that value calculation.
How Much Do Solar Panels Increase Home Value?
A few different studies have looked at the increase in home value that adding solar panels can provide:
- Homes with solar panels sold for 4.1% more on average than comparable homes without solar power. This translates to a $9,274 increase in the sale price for the median-valued US home, according to a Zillow study published in 2019.
- Solar power systems added $3.78 per watt to the value of a home on average, according to independent appraisers that evaluated home sales in California, Oregon, Florida, Maryland, North Carolina, and Pennsylvania as part of a 2015 study by the Lawrence Berkeley National Laboratory.
- An average-sized solar array can increase the value of your home by approximately $15,000, according to data assembled by the Office of Energy Efficiency & Renewable Energy (EERE). The actual increase will depend on several factors including location, electricity rates, and system size, but it’s no surprise that 46% of homeowners have considered installing solar panels on their homes, according to a 2019 survey from PEW Research Center.
- Solar panels can add an incremental home value of $10 to around $25 for every $1 reduction in annual energy bills, according to a study by The Appraisal Journal. That research was funded by the Department of Housing and Urban Development (HUD) and the US Environmental Protection Agency (EPA), and it’s been cited by the National Renewable Energy Laboratory (NREL). This study was completed in 1999, in case you’re worried that solar leading to an increase in home values is a recent trend.
- Home listings with solar power are on the market for 13.3% less time, and are 24.7% more likely to sell for over the asking price when compared to non-solar homes, according to data from Rocket Homes. Their study suggests that solar is a value-add for buyers and makes homes easier to sell.
These studies all demonstrate that solar panels can have a significant return on investment, in addition to the monthly savings that they can provide.
How Solar Panels Increase Your Home Value
When you invest in solar panels for your home, numerous benefits combine to create a higher value:
- Lower monthly energy costs
- Reduced carbon footprint
- Increased energy independence
Factors That Influence Your Home Value When You Have Solar
To evaluate how much solar panels can increase the value of your home, there are four key factors to consider:
- Savings Potential
- Installation Costs
- Environmental Values
Value increases can depend on the location of the home, as shown by the Zillow study. For example, homeowners in Riverside, CA, enjoyed an average price premium of $9,274, while those in Orlando, FL, saw a boost of $10,994. Hot markets such as Los Angeles, CA and New York City, NY experienced double the value increase at approximately $23,295 and $23,989, respectively. At the high end of the market, those in San Francisco, CA enjoyed a value increase of $41,658, or a 5.4% premium over non-solar homes.
Homeowners can use solar energy to lower their monthly energy bills by offsetting some of their electricity needs with the power generated by their solar array. Typically the higher the savings potential that solar provides, the more value that can be added by going solar.
Your energy savings can depend on whether you’re buying or solar leasing, the electricity costs in your area, and your family’s energy consumption compared to what the solar panels generate, among other factors.
Many homeowners can further benefit from financial incentives and metering programs designed to promote renewable solar energy, including:
- Federal Solar Tax Credit (Residential Clean Energy Credit)
- Net Metering
- Solar Renewable Energy Credits (SRECs)
Since each program has specific nuances, make sure you understand all the details so you can take full advantage of the savings available in your area.
Many people would like to install a solar energy system on their home, but they are concerned about installation costs, requirements, and timelines. For this reason, homes already equipped with a solar energy system may appeal to home buyers who are interested in solar but hesitant about the installation costs - even if those homes come with a higher purchase price.
Think of it as a combination of location and savings potential. If you live in an area with rising home values, high electricity costs, and consistent sunshine, installing a solar panel array can help you save money on your electricity bills each month, and then add value when you’re ready to sell.
Many homebuyers prefer solar-powered homes that reflect their environmental values by reducing carbon dioxide emissions and other greenhouse gas pollutants. By using renewable energy to power your home, you can lower your carbon footprint and help fight climate change. Many people are willing to pay more for a home if it helps them do the right thing for the planet and the environment.
Factors To Consider When Going Solar
A solar panel system for your home could increase your home value, decrease your monthly energy bills, and help defeat global warming. But before you embark on a solar panel purchase and installation, there are several factors you can consider to evaluate your total return on investment:
The location and placement of your house will greatly impact the amount of sunlight that reaches your roof and thus, the amount of solar power your panels can produce. Roughly speaking, more sun equals more power.
In the United States, southwestern states like Arizona and New Mexico enjoy higher peak sun hours—a measure of the average amount and intensity of sunlight that reaches a specific location—compared to northern states like Washington and Maine.
Beyond peak sun hours, it’s important to look at obstructions such as tall buildings, trees, and hills that may hinder sunlight from reaching your roof, and reduce the amount of power your panels can produce.
Before installing solar, ask a solar installation company to review your home and its suitability for solar power. They have the experience and skill to design a solar panel system that will maximize the amount of sunlight your panels can receive.
Energy Consumption Rate
Every household uses a different amount of energy, and the usage will often vary by month. Factors such as family size, house size, and the number of rooms will determine how much electricity you use and pay for each month. In addition, the number of appliances you use in your house can have a significant impact on your utility bills.
If you’re considering solar panels for your roof, be sure to provide your solar panel installation company with all of your electricity bills from the past year. This information will help them determine the average amount of electricity you consume monthly, so they can calculate the number of panels you need to offset that usage.
If requested, they can also design your system to handle future increases in power consumption due to changes like buying an electric vehicle, installing a new pool, adding a new family member, etc.
As mentioned earlier, you may be eligible for financial benefits and incentives if you choose to go solar. Understanding the available incentives in your area can help you determine if solar panel installation makes economic sense for your household.
We recommend talking to your accountant or a related tax expert about your potential benefits from the solar tax credit. You can also confirm rate options with your local utility company, and ask whether or not they offer net metering. Finally, you should review the Database of State Incentives for Renewables and Efficiency to see if you could qualify for other incentives in your area.
Installation Costs vs. Time
Installing a solar energy system on your home is a significant investment that could increase your home value and reduce your energy bills. Before you decide to move forward, you should ask yourself how long you intend to stay in the house. While you may see a reduction in electricity bills immediately after installation, it will take time to reach “break even” and see the full return on your investment.
If you plan to remain in your home for several years, especially once you’ve passed the solar panel payback period, then a solar panel system is likely a good investment. On the other hand, if you’re planning to sell your home in the near future, you’ll want to look at the estimated increase in sale price relative to your installation costs and short-term energy savings.
While solar-powered homes have been shown to sell faster and at a higher price point in many markets, it’s important to look at the full picture before you decide to install.
Quality of Installation
Unfortunately, many solar companies go out of business, leaving homeowners without access to service and support. For this reason, you should always work with a solar installation company that has years of experience and a track record of reliable service. Spend time on their website, read reviews from previous customers, and find out what’s included in their installation costs. If possible, ask the installer to connect you with previous customers so you can gauge the quality of their work.
A reputable solar installation company will have a team of experts who can advise you on the right solar power system for your roof and provide you with a free solar assessment. Manufacturer warranties, installation services, and maintenance coverage should be clearly outlined in your proposal. Make sure you understand what you’re buying, and who you’re buying it from before you invest in solar.
Palmetto Solar Can Help You Increase The Value Of Your Home
While the data shows that solar panels can help increase the value of your home, it’s important to work with a trusted solar installation company that can outline your costs and savings to ensure a positive return on investment.
As a leading solar installation and maintenance company, Palmetto helps homeowners increase their energy savings and control by delivering end-to-end solutions that decrease reliance on the electrical grid. We believe that clean energy is for everyone, and strive to expand access to green energy by partnering with local solar specialists in all of the communities we serve.
Our solar services extend beyond the design and installation process to include maintenance and repair, cleaning, inverter and optimizer replacement, and long-term performance data. We pride ourselves on providing high-quality solar products and exceptional customer service, so you can increase your long-term savings with ease and peace of mind.
If you want to install solar panels and increase the value of your home, get started today with our free solar design tool. Then, reach out for more information. Based on the specifics of your home and how long you intend to stay, we can help you evaluate if solar is right for you.