Explained: Do Solar Panels Increase A Properties Value?

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If you own a home, you have probably got a long list of potential home improvements. Your partner might want a new bathroom, but you could perhaps prefer to spend that money on a swimming pool. If your elec-tricity bill is becoming a problem, or if you would love to do something for environmental protection, you have probably also considered installing solar panels.


The reason why you haven’t pursued the solar panel option further might be that it requires a fairly large investment, and you are not sure whether it will significantly improve the value of the property. If that is the case, this article was written especially for you.


By how much will my property’s value increase if I install solar panels?


The good news is that various studies have confirmed that residential properties with solar panels consist-ently sell for higher prices than similar homes without solar panels in the same area. Early research con-centrated on well-established solar markets like California. These showed that home values on average in-creased by at least four percent when the owner installs solar panels.


Newer studies expanded that research to other parts of the United States. In 2015 the Lawrence Berkeley National Laboratory, which works closely with the Department of Energy, released its ‘Selling into the Sun’ report. This studied sales of solar-equipped residential properties in eight US states over a period of 11 years. The goal was to find out exactly how much a home’s value will increase when a solar panel system is installed.


Their core finding was that American homebuyers are consistently prepared to pay a premium for homes with solar panel systems. The average increase in value was around $4 for every watt of solar capacity, i.e. $4 000 for every kilowatt. This means that a solar panel system with a total capacity of 6 kilowatts will boost your home’s resale value by around $24 000.


Note: This study covered only homes where the property owner owned the solar panel system outright. Leased systems were not included, because these systems do not belong to the homeowner and therefore can not be regarded as permanent home improvements. Quite a few prominent property agents have in fact warned homeowners that a leased solar panel system might actually deter many prospective buyers.


Another study (published in the Appraisal Journal) showed that, for every $1 reduction in the yearly utility bill, a home’s value increased by $20. To put it differently: If you install a solar panel system that slashes your annual electricity bill by $400, the resale value of your home will on average increase by $8,000.


Will the rewards for installing a solar panel system exceed the costs?


As with any other investment, installing a solar panel system should make financial sense. If you spent $20 000 on installing solar panels and your home’s value only increases by $14 000, there must be other re-wards to justify the additional $6 000.


In the case of solar panels this can come from two sources:


Tax credits. At the moment the EPA still gives tax credits if you install a solar energy system. It used to be 30 percent, but this system is now being phased out and will expire at the end of next year. Right now, however, if you owe federal taxes, you can still deduct the credit straight from your tax payment. Alterna-tively, when you file your tax return you can deduct it from your taxable income.


This, of course, has a direct impact on the net cost of the solar energy system. In the example above it will mean that your net investment will drop from $20 000 to $14 000 ($20 000 minus 30 percent tax credit). This equals the increase in property value, so you are effectively enjoying the benefits of a solar system free of charge – and any savings on your electricity bill will be a bonus.


Reduced electricity bills. Depending on the size of the solar energy system you are installing, your elec-tricity bill could be reduced by as much as 100 percent. And, as we saw earlier in this article, installing a solar panel system that cuts your yearly electricity bill by $400 will on average increase the resale value of your home by $8 000.



  1. https://www.homelight.com/blog/buyer-do-solar-panels-increase-property-value/
  2. https://www.energy.gov/eere/solar/downloads/solar-homes-sell-premium
  3. https://www.energysage.com/solar/why-go-solar/increased-property-values/
  4. https://www.nytimes.com/2015/02/22/realestate/solar-panels-and-home-values.html
  5. https://www.solar.com/learn/reduce-your-electricity-bill/

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