Can Solar Panels Improve Your Home’s Value?
Do Solar Panels Increase Property Value?
Solar power is one of the most popular sources of energy. Although the upfront costs associated with switching to solar can be hefty if you purchase the system outright, the benefits and savings generate a positive return on investment in the long run. How much will solar panels increase home value? Well, several studies prove that homes fitted with solar panel systems are valued and sold at higher prices than similar homes without solar in the same area. On average, the value of a home increases 3 to 4 percent with the addition of solar panels. A 2019 Zillow study found a 4.1 percent markup for homes with solar. With the average home price of $200,000 in Texas according to Zillow, that would result in a premium of between $6,000 and $8,000. However, results will differ depending on the factors outlined below. We will also cover other benefits of running a solar-powered home aside from increasing property value.
Factors That Influence How Much Solar Panels Increase Property Value
So, do solar panels add value to your home? It depends on several factors such as:
Your state and city
The cost of electricity in your area
The size of the installation and your home
The type, age, and warranty of your solar panels
How much energy the system can save
The location of a home is an important factor that determines how much value will be increased with the addition of solar panels. For example, installations in active solar markets like California and New Jersey typically yield higher returns than comparable installations in less developed markets because buyers, realtors, appraisers, and lenders tend to be more familiar with the benefits of solar at the outset of the process.
THE SIZE OF THE INSTALLATION
The number of solar panels your roof can accommodate directly relates to the property value increase post-installation. Property value increase is directly related to the quality and quantity of the solar panels installed. The production capacity of your solar panels needs to be proportional to the size of your house. So how do solar panels affect property values? A Berkeley Lab study estimates you can expect the resale value of your home to increase by about $5,911 for each 1 kilowatt (kW) of solar installed.
AVERAGE ENERGY USAGE AND SAVINGS
One of the easiest ways to calculate home value increase based on energy consumption is to run your own cost benefit analysis. The value of your system will also differ based on the cost of electricity where you live. The best place to start is by looking at your energy bill and figuring out the cost of the system size you would need based on the kilowatt-hours used. The average system installation is about $3-4 per watt. In Texas, a 300 watt panel will produce about 9 kilowatt-hours per day. Once you have your daily or monthly usage, you estimate how many panels you would need to fully power your home. You can then compare it to the average resale value in your area.
QUALITY OF SOLAR PANEL
The panels themselves are another factor when it comes to calculating value. Technology, lifespan, and warranty for various manufacturers of solar panels, inverters, racking, and other equipment may vary widely. It’s important to take your time and do your research when it comes to choosing the best solar technology products to make the most of your long-term investment.
Why is Solar Energy So Valuable?
Compared to other major home improvements and methods of sustainable living, installing solar panels is a relatively easy one-time project that has little impact on your living space. Most of the time and effort on your part is doing the research to find the right company and getting the paperwork through the proper channels. After that, the installation should only take about a matter of days and you will typically be set up with a warranty for the next 25 years. A 2015 survey showed 61% of respondents agreed that solar electrical or water heating systems were desirable in a home they’d be interested in purchasing.
Benefits of Having a Solar Powered Home Aside From Increasing Property Value
HELPS PRESERVE THE ENVIRONMENT
Choosing to run your home with renewable energy helps protect the planet and reduces your carbon footprint. By using the power of the sun to produce electricity you end up reducing the need for burning the fossil fuels that impact local air quality and emit harmful greenhouse gases.
SAVES YOU MONEY ON YOUR ELECTRIC BILL
After you save enough on your energy bill to recoup your initial investment, running on solar is essentially free electricity for the rest of the panels’ 25-year lifespan. In the last 15 years, utility rates have increased by about 2.9% every year. The initial upfront price could save you from the increasing utility prices for the next couple of decades. There are also federal, state, and local incentives, such as the federal tax credit that allows you to deduct 26% of the total cost, making them even more affordable for the average homeowner.
One of the biggest deterrents for many people, when it comes to using solar panels as their home’s main source of energy, is the question of reliability. Solar energy is actually an extremely reliable source of energy. When it comes to energy production the panels require sunlight so they will be far more productive during certain seasons, but as long as the sun is shining, their rate of failure remains very low. Research has shown that between 2000 and 2015 only .05% of solar panels failed. As we move into a new decade that rate will likely continue to decrease as modern solar panels continue to advance with technology. In addition, your home solar power system will most likely be connected to the local electrical grid, which means you will have ready access to backup power from the grid whenever the sun isn’t shining.
For many, a solar energy system makes sense as an environmentally conscious investment that pays for itself over time. But do solar panels add value to a home? In short, yes. Increasing the value of your home is only one of the many reasons to switch to solar. Installing solar panels is one of the safest and smartest long term investments you can make as a homeowner. If you are on the fence about jumpstarting your sustainable journey, these are all reasons to make the leap. If you are still unsure about your options we have representatives ready to answer questions and provide you with a free quote and estimate of your savings potential.