Solar increases property value graphic EnergySage

New report says solar panels increase home value

Reading Time: 3 minutesInstalling solar panels can significantly increase your property’s value, according to a new study from the Lawrence Berkeley National Lab (LBL). The report, titled “Selling into the sun: Price premium analysis of a multi-state dataset of solar homes“, builds on previous research which concluded that homes with solar panels in California sold for more than those without.

Do solar panels add value to a house?

In addition to California, the new study investigates home pricing trends Connecticut, Florida, Massachusetts, Maryland, North Carolina, New York and Pennsylvania by analyzing the sales of over 20,000 homes in these states. LBL’s analysis of the housing markets in these other states shows that the premium paid for homes with solar is not a phenomenon isolated to the Golden State. The clear takeaway: solar panels really do add value to a home. If you are thinking about purchasing a solar system for your home, the study’s conclusions should give you a boost of confidence that you are making a smart investment. LBL finds that homes with solar panels will benefit from a ‘solar premium’ when they are sold because buyers are willing to pay more for a home with solar panels. solar and home value graphic

How much does solar power increase home value?

Example: a 5 kilowatt (kW) solar system (the national average) will offer 5,000 watts of power. LBL says that each watt of solar adds about $4 to a home’s value in California and about $3 per watt elsewhere. Thus, a home with solar should sell for about ($4 x 5,000W =) $20,000 more in CA or still ($3 x 5,000W =) $15,000 more outside of CA. Specifically in this state analysis, prospective buyers wondering if solar panels increase home value were pleasantly surprised.  What is surprising about these figures is that they are very close to what you would pay for a brand new solar system today. Our own analysis of prices for 6kW solar systems in California reveals that some of the more expensive systems cost just over $4/W. And bear in mind that these prices are what you would pay before you take into account the generous 30% Federal tax incentive that is available.

Low-cost solar power in California is your best investment

The report notes that the difference between the solar premium for solar panels in California as opposed to the non-Californian states is “not statistically significant”: The lower premiums may be due to “lower net costs and income estimates” in the other states. In essence, the premiums in non-Californian states may have to do with lower solar installation prices and electricity rates rather than because solar has a lower valuation there. All of this suggests that if you sell your house soon after you have solar system installed, you will recoup most or all of your investment, even as you save money on your power bills. It also confirms what we’ve said before: Payback periods on solar power systems are not something to be overly concerned about. Your solar system will either increase your home value significantly should you decide to sell your house, or it will pay itself off in power bill savings before you move out. In both cases, solar is a sound investment. Other interesting points from the report include:
  • The solar premium for newly-built homes was slightly lower than for older homes, indicating that retrofit solar installations are valued the same as systems which are built into the home.
  • The $/W solar premium was smaller in homes with larger systems, indicating that there may be a ‘green cache’ effect. As the report says, “Buyers might be willing to pay a certain amount for having any size of PV system on their homes and then some increment more depending on the size of the system”.
  • The authors recommend that homes that went solar through solar leases or PPA programs should be an area of future research; the current study examines only homes with owner-owned systems.
solar and home value graphic

28 thoughts on “New report says solar panels increase home value

  1. Mike

    Be aware that net metering – the biggest benefit for solar electric users – is going away in CA. SMUD is cutting solar production value to a fixed rate of $0.07 or less/kwh, while still having consumption charged at TOU rates that increase annually. Check their web site. Won’t get there for a while (process, of course), but it’s happening; when they went mandatory TOU it was obvious that no comments against the change were going to be affect the decision; this one is the same. Solar was marginal before TOU in SMUD due to low rates; now it’ll be even less useful.

    This could set a precedent for others in CA. It certainly does for other municipal utilities, since they are not PUC or CEC regulated. Lack of transparency is also an issue; SMUD had no problem doing interconnection for my system based on net metering; now, 6 months later, they serve notice that it’s all over. My system had an expected payback period of 8-9 years at the time of purchase; now it’s effectively infinite (longer than the warranty on the system).

    Rooftop solar should not be considered in CA any more.

  2. walter

    The solar panels will increase value to your if you own them outright not financed. If the solar panels are financed considered personal property. Please do not get tricked talk to your lender because they are the subject matter expert not the solar companies.

  3. Bill Caruso

    I have invested in single family residences since 1992, and spoken with dozens of brokers about this matter. All have reported to me that solar panels break up their deals because they are unknowns that buyers, lenders, inspectors, and insurance folks don’t understand and won’t research.

    Read the fine print in this report: it was bought and paid for by a solar activist group. Berkeley used to be a respectable name. It has become a haven for leftists with agendas who shut down free speech. It appears their once-respected research is now just advertising for the highest bidder.

    Please don’t believe a word I say about this. Install a fresh set of solar panels on your house and crank up the price by $20,000 and let us know how that works out for you!

  4. Russell

    I just had my home appraised in New York and they told me that solar adds zero value to my home. I have a 9.2kw system and I own the system and have no electric bill, except the normal fixed charges.

    1. Mr EJ

      You need to get a Green Certified Appraiser and Broker. It’s an Industry which needs to be understood and the real state industry has to improve and learn about. NY is doing a lot better now in 2020 when it comes to Solar and Realstate.

  5. Oliverduke

    Thank you so much for this post.Solar panel is increases value of your home.It is cost effective.I agree with your opinion.I will share your post to other persons.


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