While it may sound cliche, every home is unique. That’s true when it comes to home solar panels, too. Both the cost of solar and how much it will boost property values depend a lot on the home.
That’s right: Solar panels can increase the value of your home. Here’s what you need to know about the value solar panels can add and whether or not they’ll add to your property taxes, too.
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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 (PDF) 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 (PDF) 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 (PDF) by the National Renewable Energy Laboratory (NREL). This study was completed in 1999, showing that solar increasing home values isn’t 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
Solar panels might make your home more valuable in a few key ways.
- Lower monthly energy costs
- Reduced carbon footprint
- Increased energy independence
Factors Influencing Your Home Value When You Have Solar
There are four key factors to consider when evaluating how much solar panels can increase the value of your home.
Location
Value increases can depend on the location of the home, as shown by the Zillow study. For example, homeowners in Riverside, California, enjoyed an average price premium of $9,274, while those in Orlando, Florida, saw a boost of $10,994. Hot markets such as Los Angeles and New York City experienced double the value increase at $23,295 and $23,989, respectively. At the high end of the market, those in San Francisco enjoyed a value increase of $41,658, or a 5.4% premium over non-solar homes.
Savings potential
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 solar provides, the more value that can be added by going solar.
Your energy savings can depend on whether you’re buying or leasing solar, 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 requirements, make sure you understand how the details apply to your situation.
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Installation costs
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.
Environmental values
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 address 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:
Your location
Your home’s location matters on a large and small scale.
States such as Arizona and New Mexico have more peak sun hours — a measure of the average amount and intensity of sunlight — compared to other regions of the country. At the house level, the amount of shading, HOA restrictions, your roof’s direction and angle could all affect your home’s suitability for solar.
Energy consumption
Every household uses a different amount of energy, and the usage often varies by month. Factors such as family size, house size, use and efficiency of appliances, and weather will determine how much electricity you use each month.
If you’re considering rooftop solar panels, check your electric bills from the past year. You should be asked to provide them to a solar panel installation company. This info will help determine the average amount of electricity you consume and help calculate the number of panels needed for your new system.
Solar installers may be able to design your system to handle future increases in power consumption due to changes like buying an electric vehicle, installing a new pool, or adding a new family member.
Local incentives
You may be eligible for financial incentives if you go solar. Understanding the available incentives in your area can help you determine if solar panels make economic sense.
Talking with the solar panel installation company, an accountant or tax expert, and/or the utility company can help you know what’s available to you. You can also review the Database of State Incentives for Renewables and Efficiency to see if you qualify for other incentives in your area.
See how much you can save by going solar with Palmetto
Potential lifetime savings
Before moving forward, you should ask yourself how long you intend to stay in the house. While you may see lower electricity bills in the short term, it will take time to get to the end of your solar panel payback period and break even. Solar panels are built to last and be at least 80-90% efficient for 25 or more years.
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 in many markets, it’s important to look at the full picture before you decide to install.
Quality of installation
Unfortunately, solar companies can go out of business, leaving homeowners without access to service and support. For this reason, consider a solar installation company with years of experience and a track record of reliable service. Spend time on their website, read reviews, and find out what’s included in their installation costs. If possible, ask the installer to connect you with previous customers.
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.
Will Solar Panels Increase My Property Taxes?
A solar panel system adds to a property’s value in many cases. At the same time, you don’t want higher property taxes. Luckily, solar property tax exemptions in some states and localities allow homeowners or business owners to exclude the added value of a solar system from their property valuation.
| State | Property Tax Exemption? | State | Property Tax Exemption? |
|---|---|---|---|
| Alabama | No | Montana | Yes, for 10 years |
| Alaska | Locally only | Nebraska | No |
| Arizona | Yes | Nevada | No |
| Arkansas | No | New Hampshire | Locally only |
| California | Yes | New Jersey | Yes |
| Colorado | Yes | New Mexico | Yes |
| Connecticut | Yes | New York | Yes, for 15 years |
| DC | Yes | North Carolina | Yes |
| Delaware | No | North Dakota | Yes, for 5 years |
| Florida | Yes | Ohio | Locally only |
| Georgia | No | Oklahoma | No |
| Hawaii | Yes | Oregon | Yes |
| Idaho | No | Pennsylvania | No |
| Illinois | Yes | Puerto Rico | Yes |
| Indiana | Yes | Rhode Island | Yes |
| Iowa | Yes, for 5 years | South Carolina | No |
| Kansas | Yes, for 10 years | South Dakota | Yes |
| Kentucky | No | Tennessee | Yes |
| Louisiana | Yes | Texas | Yes |
| Maine | Yes | Utah | No |
| Maryland | Yes | Vermont | Yes, up to 50 kW |
| Massachusetts | Yes | Virginia | Yes |
| Michigan | Yes | Washington | No |
| Minnesota | Yes | West Virginia | No |
| Mississippi | No | Wisconsin | Yes |
| Missouri | Yes | Wyoming | No |
Note: The details of property tax exemptions may vary by state and over time. Ensure you know how your state's exemption works and consult your own legal and tax advisors.
You can find more information or state-by-state details from resources such as the Solar Energy Industries Association and N.C. State University’s Database of State Incentives for Renewables and Efficiency.
Going Solar With Palmetto
While the data shows 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 energy independence by delivering end-to-end solutions that decrease reliance on the electrical grid.
If you want to install solar panels, get started today with our free solar design tool or reach out to a solar advisor.
Solar panels might be a perfect fit for your home. Find out today.
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Solar and Home Value FAQs
How much value do solar panels add to your home?
Data shows home value usually increases when homeowners add solar panels to their homes, though it certainly varies by home. A number of states provide property tax exemptions and other incentives or credits for installing a solar system, so these programs help the short- and long-term value of going solar.
Is it harder to sell a home with solar panels?
Again, while there is no one-size-fits-all answer, studies show it is easier to sell a home with a solar energy system, with a higher sale value on average.
How long will it take for solar panels to pay for themselves?
While you may see lower electricity bills in the short term, it will take time to break even and see the full return on your investment. You can read our guide on estimating the solar panel payback period. The most common estimate of the average payback period for solar panels is 6-10 years.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
