Do Solar Panels Increase Home Value? (2024 Guide) | SaveOnEnergy

Do Solar Panels Increase Home Value? (2024 Guide)

Last updated 01/19/2024

Solar panels can increase your home value by $4 per watt or an average of $34,400.
Your annual property taxes may increase if you install solar panels. Many states offer exemptions to increased property taxes after installing solar.
If you are interested in buying a home with solar panels already installed, confirm the system size, warranty coverage, and whether it has been paid for outright.

Home solar panels are an expensive investment, leaving many potential customers wondering whether they’re worth the cost and if a solar installation will impact their home’s value. Generally, home solar panels will raise the value of your home and make it more attractive to potential future buyers. According to the Department of Energy (DOE), solar panels typically increase home value by $15,000 on average.

This page covers everything you need to know about how solar panels may impact the value of your home, including how the added value breaks down, the impact solar can have on property taxes, and what to consider when buying a home with solar installed.

How much do solar panels increase home value?

Various research has focused on pinpointing how much value solar panels add to a home. A 2015 study from the DOE’s Lawrence Berkeley National Laboratory (LBNL) estimated potential homebuyers are willing to pay a premium of about $4 per watt of installed solar. Based on data from the LBNL’s Tracking the Sun report, the average solar panel array in the U.S. is 8.6 kilowatts (kW). There are 1,000 watts for one kW. Following is a breakdown of how we can estimate the added home value for the average solar panel system.

(8.6 kW system size X 1,000 watts) X $4 per watt added value = $34,400

Zillow released a study in 2019 showing homes with solar panels sold for about 4.1% more than homes without solar panels, increasing home values by an average of $9,274. Home values increased most in San Francisco, followed by New York, Los Angeles, and Orlando.

Clearly, there’s a range of estimates around the exact amount solar panels add to your home value. In recent years, the price of solar panels has decreased while the cost of homes in the U.S. has significantly increased. Some estimates show the average home price has risen by almost 38% since 2020.

Following are a few factors that may impact how much value solar panels add to your home.

Your solar system size, cost, and components: In general, the larger the solar system, the more value it can add to your home. Homebuyers may also consider additional components, like solar batteries, to be a perk.
The popularity of solar near you: If home solar panels are popular in your area, you may find potential buyers are more willing to pay a premium for an installed system.
Your area’s electricity market: Electricity rates vary by location. If you typically pay high energy prices, a solar panel system may add even more value to your home because of the potential bill savings.
The condition of your solar panels: Keeping your solar panels maintained and in good working order ensures the system adds to your home value.

Could solar panels decrease my home value?

Yes, solar panels could decrease the value of your home if the solar system is in poor condition or wasn’t installed properly. This potential defect is one of many reasons why we discourage attempts to DIY solar panels and promote finding a licensed installer. In general, solar panels almost always increase home value as long as they are professionally installed and well-maintained.

Solar panels could deter potential buyers if you lease the system. You can’t take the solar panels (or the lease) with you when you move, so the new homeowner must agree to take over the lease and its terms.

Do solar panels increase property taxes?

If you own your home, you pay property taxes each year. According to Bankrate, property taxes are calculated locally. Your taxes depend on your current property value and state and municipality tax rates. (Bankrate is also owned by SaveOnEnergy’s parent company, Red Ventures.)

Because solar panels increase the value of your home, installed solar will also likely raise the amount you owe in property taxes. The exact amount will vary depending on your home value and location.

According to the Solar Energy Industries Association (SEIA), 36 states offer a property tax exemption on solar panels as an incentive for residents to invest in renewable energy. Depending on where you live, you may qualify for an exemption (indefinitely or for a certain number of years). Learn more about state solar incentives in your area.

Buying a house with solar panels

Home solar panels are becoming more common across the U.S. Part of the boost in solar popularity is due to the Inflation Reduction Act, which reinstated the 30% federal tax credit for residents who purchase solar panels. As residential solar grows, homebuyers may encounter solar panels on potential new homes more frequently.

If you are interested in purchasing a house with solar panels installed, consider the following before making an offer:

Does the current homeowner own the solar system? If the homeowner signed a solar lease, you will need to take over the lease agreement if you purchase the home. Keep in mind that under a solar lease, the installation company maintains ownership of the solar panels. This can be good news for maintenance (the installer is responsible for maintenance and repairs) but bad news for monthly payments or if the leasing terms are unfavorable.
Installers matter. Be sure to clarify which solar professional handled the installation of the solar panel array and do some research on the installer. You want to ensure the installer is licensed, offers solid warranty terms, and is still operating in your area.
Does the system size match your needs? Ask about the solar system’s size and how much electricity it typically generates. You may be specifically searching for a home with solar panels to cover your energy needs. If that’s the case, you should confirm that the system is large enough to generate enough electricity to match your typical usage (which you can find listed on your previous energy bills).
When can you expect to experience savings? In some instances (for example, if the solar panels are already fully paid off), you may be able to experience instant savings on energy bills by purchasing a home with solar panels. In other circumstances, you may have to make monthly lease payments, which can impact your savings despite lower electricity bills. The answer to this question will vary by solar panel system, household, and more.

Do solar panels make sense for your home?

Solar panels could be a great investment for your home and will likely increase the amount you could receive if you sell your home in the future. However, a few factors can impact whether solar is the right choice for you. Before signing a solar contract, consider these questions:

Are you moving in the near future? Once solar panels are installed, you won’t take them with you if you move. Uninstalling, transporting, and reinstalling a solar array would be more expensive than buying another system after you move. The average solar payback period is about 14 years. You may not plan to stay in your home for that long — but whether it’s a worthwhile investment depends on your typical energy bill amount and how much power your solar system provides. In general, if you plan to move within a few years of installing solar, you may not have time to recoup enough of your initial investment.
Is your roof in good condition for solar installation? Before installing rooftop solar panels, a solar installer will assess the condition of your roof. If your roof is older, in poor condition, or in need of maintenance, you may need to repair or replace it before installation day. This can greatly add to the total cost of adding solar panels.
Does your state offer property tax exemptions for solar installations? As mentioned previously, several states offer exemptions on increased property taxes after installing solar. These exemptions can help offset a portion of the cost of solar panels. If you don’t live in one of these states, consider how much solar may increase your annual property taxes.
What size system will you need? The amount of energy you use each month will determine the system size you need. In general, the larger the system, the higher the price (although there are exceptions to this rule). If you want a system that completely covers your energy usage, you will likely need more solar panel modules. Larger systems can extend your solar payback period, meaning it’ll take longer to experience a return on investment.
Can you purchase a solar system or will you need to lease it? How you choose to pay for solar panels matters. If you are able to purchase solar panels upfront, they can instantly become an asset for your home. However, if you finance them over time or sign a solar lease, you may run into difficulties selling your home due to your loan or lease agreement. While a solar loan or lease won’t detract from your home’s value, they could be a complicating factor for potential buyers.