Home sales

Do Solar Panels Increase Home Value? Understanding Solar Home Sales

Over the past decade, more and more potential buyers are willing to pay more for homes equipped with photovoltaic (PV) panels. The energy savings associated with solar, as well as the growing interest in environmental sustainability, are among the reasons why.

But the size of this premium and the potential energy savings generated by a solar home system vary widely by location. To understand how solar panels increase the value of a home, several factors must be taken into account.

How much do solar panels increase the value of a home?

Interest in residential solar has grown considerably in recent years. According to a 2019 Pew Research Center survey, 46% of homeowners said they had seriously considered installing home solar panels in the past year.

In a 2015 study, researchers from Lawrence Berkeley National Laboratory deployed seven evaluators to assess the added value of a PV array system to single-family homes in six different states. They found that homebuyers were willing to pay an average of $ 15,000 more for a home with a typical system size of 3.6 kilowatts.

Likewise, an analysis of the Zillow online real estate market found that between March 2018 and March 2019, homes with solar power systems in several high-demand real estate markets across the country were typically selling for 4.1% more. than similar homes without solar power – about $ 9,274, on average.

Location matters

The premium varied considerably depending on the market. In Zillow’s analysis, homes in Riverside, California, and Orlando, Florida received a premium of approximately $ 10,000 and $ 11,000, respectively. That premium more than doubled in hot markets like Los Angeles ($ 23,295) and New York ($ 23,989), while San Francisco homes with PV enjoyed a whopping $ 41,658 premium over others. houses.

Sunny Arizona may offer the best value for money: A 2017 study of a sample of homes found that solar panels that produce electricity offer an average premium of around $ 45,000, or 15% of the median value of the House.

On the other hand, homeowners in states with few financial or regulatory incentives for solar power may see the potential premium diminished.

Factors That Influence Home Value


Houses with solar panels for sale, against the backdrop of Pico del Teide volcano in Tenerife, Spain.
EyesWideOpen / Getty Images

Why are many potential buyers willing to pay a hefty premium for homes with preinstalled solar panels? There is no single explanation. Certainly, as residential solar power becomes more mainstream, buyers increasingly see it as an upgrade, a home improvement that can generate long-term income.

Energy savings

Solar energy is now the cheapest form of electricity in most countries around the world. Homeowners can save a flat fee on their electric bill over the life of their solar system. Exactly how one can save depends on location, electricity use, and other factors, but many potential buyers know that a solar-powered home with a newly installed system will often be worth more than the premium it needs. ‘they pay for it in the long run. By simply visiting the utility tariff database, they can find out how much the utility company will reimburse them for returning excess energy generated by solar panels to the grid.

In many parts of the United States, there are other potential financial incentives associated with solar power generation. If you live in an area that offers Renewable Solar Energy Certificates (SRECs), for example, you may be able to earn extra money by selling them to your utility. Prices vary, but in some states SRECs can be worth over $ 300 each. Many homeowners generate enough solar power to acquire several SRECs per year. The State Incentives for Renewable Energy and Energy Efficiency Database provides a breakdown of the State Incentives for Renewable Energy and Energy Efficiency.

No installation required

The most intimidating aspect of using solar power at home is usually the start-up costs and paperwork, so buying a house with photovoltaic panels already installed and producing cheap electricity for years to come. even decades, is an attractive selling point for many buyers.

The inverters needed to convert solar power to electricity will last a decade or more, while solar panels are typically guaranteed to last 25 years and will often last longer, but with reduced efficiency. The installed panels are also easy to maintain; the rain washes away the panels and the snow melts quickly.

Environmental values

For many potential buyers, buying a solar home is a win-win solution: they save on electricity costs and have the satisfaction of knowing that they are helping to reduce greenhouse gas emissions and the atmospheric pollution.

According to the National Renewable Energy Laboratory, the average American household can significantly reduce their annual carbon dioxide emissions by switching to solar electricity. But that’s not all: emissions of sulfur dioxide and nitrogen oxides, which can lead to respiratory disease and cardiovascular disease, are estimated to drop by 80 pounds and 50 pounds per year, respectively.

Given the financial incentives, homeowners looking to increase the value of their home and save money on their electricity costs in the meantime can consider the potential benefits of installing a solar system.

other considerations

Although it is rapidly gaining popularity, solar power will not be attractive to all potential buyers. Some buyers may not like the look of solar panels on a home, may have concerns about repairs and maintenance, or may be reluctant to make a long-term commitment to solar.

Also, keep in mind that there is a difference between a residential solar system that the owner owns and one that is rented. The latter may not add value to a home, and some buyers may be reluctant to take over a solar lease, which has credit requirements that not everyone is entitled to.

Tree climbing tip

Local real estate agents familiar with solar home sales can help assess local demand for residential solar and find out what type of high-end homes with solar systems are in demand in the market. A knowledgeable appraiser can also help identify and assess the value of a home’s green features.


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