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New report says solar panels increase home value

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Installing 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

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

  1. Kevin Baker

    To Thomas Maloney,
    The reason why leasing solar panels is not a good idea is because when you want to refinance or sell your home, you’ll find out that there’s a lien on your home. Plus you don’t get the 30% tax credit. Until the remaining balance is paid off, you’re stuck with the lien. Which is why our company does not offer the lien option. The better option is to own the solar panel system outright.

  2. Richard Cross

    Kevin Baker. That’s not entirely correct. I work for a large Solar Company and we do not put a Lien on the house, but we do file a UCC 1 Financing Statement that protects the solar system from being confiscated if the house is foreclosed on.

  3. David R Dotson

    I also work for a large solar company and PPA/Leased systems are a terrible idea. Half the value of going solar is in the independence and increased equity that come from owning your own means of power production.

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