It’s hard to say exactly how much solar panels will change the value of any one home. Take a modern home in Phoenix and compare it to a house dating back to the 18th century in Boston: They’re just too different. Overall though, real data shows a solar energy system increases home value.
In short, the answer becomes a more certain “yes” over time. Savings on utility bills, the predictable and long term value of a solar system, tax incentives, and higher resale value are some of the factors which lead to what data about solar power has been showing for decades now: that solar generally boosts 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.
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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, 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
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Factors Influencing 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.
Location
Value increases can depend on the location of the home, as shown by the Zillow study. For example, homeowners in Riverside, Cal. enjoyed an average price premium of $9,274, while those in Orlando, Fla. 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 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.
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 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:
Your location
Where is your home? We’re talking about on a macro scale. What state and area of the country? And we’re talking about a very micro level, too. Are there trees, mountains or buildings which create shade?
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. Even going street to street or lot to lot in a neighborhood could bring up trees, shade, property size, the direction a roof faces, HOA rules, and other specifics. These issues may reduce peak sunlight and therefore reduce efficient power production.
Before installing solar, ask a solar installation company to review your home and its suitability for solar power.
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 solar panels for your roof, 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 in a 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 benefits and incentives if you go solar. Understanding the available incentives in your area can help you determine if solar panels make economic sense for your household.
Talking with the solar panel installation company, an accountant or tax expert, and/or the utility company may help work through questions on topics such as solar tax credits and net metering. You can also review the Database of State Incentives for Renewables and Efficiency to see if you qualify for other incentives in your area.
Potential lifetime savings
Solar panels are built to last and be at least 80-90% efficient for 25 or more years. Installing a solar system is a significant investment that could increase your home value and reduce your energy bills.
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.
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 almost all cases. At the same time, a homeowner doesn’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 state to state. Ensure you know how your state's exemption works and consult your own legal and tax advisors if needed.
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.
Palmetto Solar Can Help You Increase The Value Of Your Home
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. We believe clean energy is for everyone and strive to expand access to it.
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. We can help you evaluate if solar is right for you.
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.
FAQs
How much value do solar panels add to your home?
Data shows home value usually increases when homeowners add solar panels to their home. This certainly varies by the 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.
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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.
Cory O'BrienSenior Director - Growth MarketingCory brings over 8 years of solar expertise to Palmetto, and enjoys sharing that knowledge with others looking to improve their carbon footprint. A dog lover residing in Asheville, NC with his wife, Cory graduated from UCSB. If you run into him, ask him about the company he founded to rate and review beer!
