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There are many benefits of solar panels that homeowners know: they reduce your energy bill, reduce your carbon footprint, and may even beat you a healthy tax credit.
But did you know that solar energy also increases the value of your home?
A 2019 zillow report indicated that properties with rooftop solar installations sold for 4.1% more than comparable residences without them. For a mid-value home, that’s roughly $9,300.
And solar-powered residences are 24.7% more likely to sell for more than the asking price, according to property listing site Rocket Homes.
Tony AccardoA Compass real estate agent in Los Angeles County, says solar power is a “big selling point” in his conversations with potential buyers.
“If there were two identical houses, but one didn’t have solar and was $50,000 cheaper, the one with solar would sell first,” Accardo told CNET.
Here’s what you need to know about how and why solar panels can increase the value of your home.
How much do solar panels increase the value of your home?
There are tax exemptions available when purchasing and installing a rooftop solar system, particularly the federal solar tax credit.
However, when it comes time to sell, the premium of having a rooftop solar system depends on a variety of factors, including where you live, the cost of electricity, and the type of system you have.
What is most attractive to home buyers is how much energy from their home their facility requires. If you can provide it all, that can reduce your electricity bill. for an average of $1,500 a year – equivalent to about $37,500 over the life of the system.
Read more: How long do solar panels take to pay for themselves?
“If solar panels aren’t on buyers’ wish lists, it’s something they plan to install themselves,” Accardo said. “They want to offset energy costs and have a better resale situation.”
Solar energy is even more beneficial than having a swimming pool, he added.
“An older couple looking at your house might not care that you have a pool. Or they might not even see it as a nuisance,” Accardo said. “These are direct savings that everyone can take advantage of.”
Where you live matters
The value of a solar installation varies substantially depending on the market. Unsurprisingly, buyers in states where electricity bills are higher place more importance on solar panels.
In January 2023, residential electricity bills were highest in California, Illinois, Michigan, New York, New Jersey, Pennsylvania, Wisconsin and throughout New England, according to the Energy Information Management.
With solar capacity to power more than 13.9 million homes, California overwhelmingly has the largest residential solar market.
Below are the top 10 states for solar energy, according to data from the Solar Energy Industry Association on the cumulative amount of solar energy capacity installed through 2023 and the number of homes that could be powered by that energy.
States with the main solar markets in 2023
| Range | State | MW of installed solar energy (accumulated) | Number of homes that could receive electricity (roof and utility capacity) |
|---|---|---|---|
| 1 | California | 46,874 | 13,904,267 |
| 2 | Texas | 22,872 | 2,677,486 |
| 3 | Florida | 13,912 | 1,663,089 |
| 4 | North Carolina | 9,310 | 1,169,056 |
| 5 | Arizona | 7,675 | 1,173,331 |
| 6 | Snowfall | 6,382 | 1,150,989 |
| 7 | Georgia | 5,913 | 710,506 |
| 8 | NY | 5,560 | 980,034 |
| 9 | New Jersey | 5,276 | 904,948 |
| 10 | Massachusetts | 5,070 | 912,036 |
Many of these states offer credits to homeowners who return excess energy to the grid. And at least 36 states offer property tax exemptions for a home solar system. So while it will increase the value of your home, it won’t increase your tax bill.
An analysis from 2015 conducted by the Department of Energy’s Lawrence Berkeley National Laboratory found that buyers in California, Connecticut, Massachusetts, Minnesota, North Carolina and New Jersey paid $15,000 more for a home with a typical 3.6-kilowatt solar photovoltaic system. (The equivalent of about $4 more per watt generated).
Some metropolitan areas have also risen to the top when it comes to solar panel adoption: Last year, they were in highest demand in Los Angeles, San Diego, Honolulu, Phoenix, San Jose, San Antonio and New York City, According to a survey. for him Environment California Policy and Research Center.
In New York, having solar panels increased the closing price of a property by 5.4%, compared to a 4.1% increase nationally. Zillow reported. For a mid-priced home in the Big Apple, that amounted to about an additional $24,000.
See this: How transparent solar panels could bring renewable energy to your windows
Electricity prices will remain high
Although inflation rates were high at the beginning of the year, the The Fed projects that it will still reach 2% by the end of the year. Still, Mark Wolfe, head of the National Energy Assistance Directors Association, said USA Today that electricity prices may increase by up to 10% in 2024.
That’s because liquefied natural gas, which powers more than a third of Americans’ electricity, has become scarcer as the U.S. exports a record amount to Europewhich has been struggling to replace the supply it no longer receives from Russia after its invasion of Ukraine in 2022.
“Unprecedented export volumes are, for the first time in history, linking American household energy bills to global calamities,” Wolfe wrote. in an open letter last fall to Energy Secretary Jennifer Granholm.
He described the situation as “an internal energy price crisis.”
Read more: Here’s How Solar Panels Can Save Homeowners Money
When asked about reasons for adding solar panels, nearly all (92%) homeowners who installed them or considered doing so pointed to the savings on utility bills, the The Pew Research Center reported.
“People are not altruistic,” Accardo said. “They are interested in solar energy for savings reasons, not for the environment.”
Will solar always add value to my property?
Having a well-maintained rooftop solar system is very unlikely to reduce the value of your property, Accardo said. Even if you don’t have solar panels, buyers can pay more for a home with a suitable roof to install them later.
But changes in state regulations may make solar power less of a selling point: California recently modified its solar incentive from a net metering systemwhere homeowners get a nearly dollar-for-dollar credit for excess energy, to a net billing program where their surplus is sold to the utility company at a substantially lower rate.
Systems installed after April 14, 2023 could net homeowners 75% less income if they don’t also have a home battery setup, according to the California Solar and Storage Association, the state’s largest solar trade organization. (Existing systems are protected by the current net metering structure.)
Similar policy changes reduced solar energy adoption in Hawaii, Nevada and Missouri, the nonprofit said. Environment America reported.
In Arizona, new rates and regulations almost doubled how long it takes for solar panels to pay for themselves, leading to a decline in adoption of between 50% and 95%, EA reported. (Despite being the sunniest state in the union, less than 200,000 homes in Arizona they run on solar energy).
The condition of your panels and your house are also a factor. If a buyer sees that he will have to invest in repairs, the price is likely to drop.
And as other states adopt net billing, having solar panels combined with a home battery backup system It will be increasingly important to get the most value out of your home.
For more information about solar panels, discover how to avoid scams and learn about the big changes to California solar incentives.
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