New Report Says Solar Panels Increase Home Value

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Solar increases property value graphic EnergySage

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.

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.

 

solar and home value graphic

 

Low Cost Solar Power In California is Your Best Investment

california berkley research solar increases home value energysage

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.





Don



10 thoughts on “New Report Says Solar Panels Increase Home Value

  1. Tom

    What a crock of garbage. Ask the appraiser if they add value during the appraisal process for the house. The answer is for the most part is a resounding NO.
    Anyone who wants solar can get a new solar lease with the most up to date technology put on the house for no or very little up front costs. So you are better off buying a home without solar on it and getting your brand new more efficient system put on it after you buy the house. But then you are still eliminating a subset of potential buyers when the time comes to sell which is usually less than a third of the term of the lease.
    Another problem is that there are millions of people who do not want to take over some old lease on an outdated system that is not living up to the promises made by the salesmen to begin with.
    Look up the complaints on any and ALL of the solar systems out there. You will find thousands of complaints where people are either paying more for their total energy usage than they did before the installation or their neighbors without solar, or they are having trouble getting the solar company to make the system perform as expected, or leaking roofs or any number of other complaints. These systems loose efficiency as they age. You have to pay for the removal and replacement when you need a new roof, and you have to climb up on your roof to keep them clean or your effeciency drops even more. Then when you go to sell your house you lose a large number of people who eliminate any house with a required lease transfer. Do your own research instead of listining to the propaganda on the solar sales sites.

  2. Sara Matasci

    Hi Tom,

    You make a great point about homes with leased solar panels – the benefits aren’t nearly as high, because of the issues with transferring a lease. This research specifically looked at homes with customer-owned solar panel systems, not leased systems.

    We have another article here that covers the differences between selling a home with owned vs. leased solar panels. In short: owned solar panel systems increase home value, and leased solar panel systems don’t really make a difference in sale price one way or another.

  3. Keith R Woodard

    My solar panels were built by Blue Raven Solar and carry a full roof warranty as my house. I had a zero energy bill last month living in Charleston, SC.

  4. Keith R Woodard

    My HOA approved my solar panels because they knew this install would ultimately increase my property value.

  5. Max Boot

    You were nice Tom is ill informed. I have had half the energy bill of my neighbors for 5 years. I use more KW and just last week my neighbor told me He was going Solar. The only reason not to go solar is if you rent. Because then you cannot. Plus if your a climate change dis-believer in 2018 you’ll believe anything..!

    Read less Tom life is LONG!!

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