Since I’ve started going solar, I’ve realized that I want to know if solar panels affect property values, and if they do, how much value does a solar system add to your home? I don’t expect to move out any time soon, but the resale value of any home is an important factor because, well, you just never know.

And knowing the value a solar energy system adds or doesn’t add can greatly affect how much you’re willing to invest in your new energy system.

So, I decided to study the issue and learn if solar energy systems add value, how much they add, what the differences are between states and other factors that can help anyone determine the investment worth of a solar power system for their home.

Do Solar Panels Add Value to a Home?

Of course, the first question is do solar panels add value to a home? The assumption is that they would, but I wanted to verify this before investing a heck of a lot of money into something like this.

The short answer is yes, solar panels increase the value of your home by about $4 per watt.

Since solar energy is cheaper, green, and cleaner than standard power-grid based electricity, a house with solar panels can easily go for more than a house without.

What About the Aesthetics?

Some people are concerned with the aesthetics of solar panels and assume the looks of them will lose some interest from buyers looking for a highly attractive landscaping and home situation. But generally speaking, solar panels are placed on roofs, which doesn’t really detract from the profile and beauty of a home or estate.

Plus, most solar panels have a much lower profile than the older days, and generally, people don’t notice the looks overall, save to note that the homeowner may be saving a big wad of cash on energy bills each month.

Red tile roofs – like those on Spanish colonial homes – and others that have a particular aesthetic to the roofing style won’t look right with solar panels, but there are alternative placements to work with this.

The Savings of Solar Energy Improve Resale Value

More important than aesthetics is that homeowners genuinely save on energy bills when there are solar panels installed.

The person who installs the panels puts out a pretty penny up-front, but the prospective buyers just see the price tag on the house and think about the long-term savings rather than the cost of installation.

This means that solar panels can really make a house – especially in sunny locations like California and New Mexico – more attractive immediately.

The headache of installing panels, determining which ones are best, et cetera, et cetera, can be a deterrent for some to install solar panels. But having everything in place already can increase the value simply for that fact.

Toss in the fact that the new owner doesn’t have to pay for them, and, well, you’ve garnered favor for your sale.

Different Regions Will Have Different Resale Values

As you contemplate installing solar panels, you’re probably already thinking about how much you’ll save using solar energy. Part of this calculation is based on the climate and terrain of your region.

For instance, my mother, who lives in Florida, will benefit more from solar panels than someone who lives in Alaska. Florida is sunnier more days of the year than Alaska is, and therefore, she will save more money on energy than someone in Juneau.

If you live in a sunny region, you’re more likely to recoup your costs for solar power installation. This will also help your resale value more than if you live in a low-light area of the world.

Solar Panels are Not an Automatic Draw for All Potential Buyers

While people who know a bit about solar – or at least have some hefty assumptions on the savings or eco-friendliness of them – will immediately be drawn to homes with solar panels already installed, some folks just won’t care.

Many potential buyers won’t know the difference in savings, and, therefore, they may wind up less concerned with the value they add to their possible new home.

If you’re showing the house yourself, you may want to put together the figures on how much you can save powering your home and have this information available to buyers. This may or may not seal the sale, but it certainly won’t hurt.

rustic wooden house with solar panels on roof do solar panels increase home value

How Much Does Solar Add to Home Value?

Various studies have been done to figure the value that solar panels add to a home. Many of these studies are done more frequently in sunny locations than low-light regions, however, so there’s a bit of a curve here.

As to the studies, in 2011, it was determined that solar panels added $20,000+ to the resale value.

The installation of the panels cost close to $36,000, minus the federal and local rebates and incentives which brought the cost down to about that same figure.

In more recent years, the cost of installation has steadily decreased in small increments, and the current cost to install a system is about $3 per watt of solar energy – plus the generators, contractor fees, etc. The overall cost for the whole system including installation is averaged at $12,810 for an average 6 kW system.

According to the Lawrence Berkley National Lab, a solar power system adds approximately $4 per watt to the home value. That means if you’ve got a 6-kilowatt system, you’re looking at about a $24,000 value increase for your house.

How to Calculate Your Home Value Increase

The best way to understand what you’re really talking in your investment, though, is formulating your own cost analysis and value increase based on that. The chart below gives a sample of how to do this for yourself.

You have two ways of calculating your current energy needs to determine your solar energy system requirements.

The first is by determining how much power you expect to use once you have the solar system in place. This chart shows the approximate watts needed to run each of the most common devices and appliances around the home.

  • Ceiling fan: 10-50W
  • DVD Player: 15W
  • CB Radio: 5W
  • Modem: 7W
  • Laptop: 25-100W
  • Drill (1/4 inch) 250W
  • Toaster Oven 1200W
  • Blu-ray Player: 15W
  • Tablet Recharge: 8W
  • Satellite Dish: 30W
  • Cable Box: 35W
  • TV – LCD: 150W
  • LED Light bulb (40-watt equivalent): 10W
  • LCD Monitor: 100W
  • Smart Phone Recharge: 6W
  • Coffee Machine 1000W
  • Fridge (16 cubic feet) 1200W

The other way, which is much more accurate for home estimates, is to look at your current energy bill and figure out the costs of the system by watts/kilowatt hours used.

Your energy bill should give you the number of kilowatt hours you used the previous month. Take this figure and divide by the number of days in the month’s calendar for your average wattage use on a daily basis.

For example, 903-kilowatt hours last month / 31 days of May = 29.12-kilowatt hours per day

1-kilowatt hour is 1000 watts of power. A 100-watt solar panel produces 100-watts of power per hour, assuming it is in full sunlight and drawing energy to the expected capacity. If you average 8 hours of sunshine a day, this means a 100-watt panel will produce 800 watts of power.

This means that to power your entire month of electricity, you would need just over 36 100-watt solar panels (29,120 watts per day, divided by 800 watts generated by a single panel).

You will need to install this many solar panels – or watt equivalents – to produce full power for your home. At $8-9 per watt – installation included – you know the basic up-front cost of your system.

In our example, 36, 100-watt solar panels would be roughly $30,000.

Compare this cost to the average resale value increase in your area, and you’ll know if the increase is significant enough to factor into your decision to install solar power or not.

Do Solar Panels Affect Property Values Differently from State to State?

As noted elsewhere, the value of a home varies depending on the location or region in which the home is. A sunny state will have a drastically different value than a low-light city home with solar panels.

As to actual figures, California has had more studies done than others, so having a legitimate breakdown by state is a bit challenging. However, you can easily assume that areas with more sunshine hours will have a higher resale value with solar panels on the home.

Apart from this aspect, there are three other major factors that determine how much solar panels affect property values in different states.

Incentives from the Local Government

The first of these factors is what the incentives look like from state to state. Some states offer property tax breaks for use of solar energy while others only give incentives for the initial purchase and installation – i.e. rebates – of solar power systems.

You can learn what your state offers by checking the online databases.

Perceptions by Locals

The other main factor that will play into the boost of resale property values is how solar energy is perceived in the given area. Sunshine states like Hawaii and Florida will have better tax benefits and a better general perception of solar energy, while Alaska and Yukon landowners might not find it so enticing.

How progressive and green the local community is will strongly influence this perception, even if the area is a lower-light region.

solar panels on multiple homes do solar panels increase home value

How Much Will Homeowners Save with Solar Energy?

Also, the cost of electricity in the area will also determine how people view alternative power sources.

Low-cost electricity is appealing to a lot of people who can’t justify the extra expense of installing solar panels. This view will affect the resale value of a home with solar panels.

The chart below gives an idea on the basic savings anticipated for users with solar energy, which may help you determine your overall cost to return analysis and the value of installation in your case.

State Potential Monthly Savings Potential Yearly Savings Average Annual Electric Bill Years until payout* 
New Hampshire$94.95$1,139.46$1,36810
New Jersey$91.02$1,092.26$1,32010
New Mexico$87.19$1,046.23$94811
New York$85.64$1,027.66$1,33211
North Carolina$65.66$787.91$1,50014
North Dakota$59.12$709.40$1,24816
Rhode Island$95.30$1,143.59$1,36810
South Carolina$74.54$894.48$1,72813
South Dakota$67.39$808.64$1,29614
West Virginia$54.67$656.03$1,33217

Other FAQs on How Much Value a Solar System Adds to Your Home

How does buying vs. leasing affect property values?

Generally speaking, leasing solar panels versus buying them for a home you plan to sell later isn’t the best investment of your money. It’s challenging for new homeowners to purchase homes with leased solar panels, due to the various issues with contracts and fees associated with this.

How new does a solar power system have to be to increase the market value of a house?

There’s no precise to answer to this, however, it can be said that the newer the system, the higher the value will be.

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