solar panels increase home value

Do Solar Panels Increase Home Value? – (Guide 2024)

Solar panels are sunlight-to-electricity converting devices, comprising many photovoltaic cells to capture sunlight and turn it into DC (direct current) electricity. Further, it converts into AC (alternating current) electricity for home and business usage.

Benefits of Solar panels include — Renewable Energy Sources, Reduction in Electricity Bills, Environmental Impact, Low Maintenance, Energy Independence, and Tax Benefits.

Above all, various studies have shown that a solar panel system increases your home’s value by about $15,000 and even the buyers are ready to pay a high value for buying a house with solar panels. Besides that, solar-powered homes tend to sell faster than those without.

house value after installing solar panels Let us further discuss the various factors by which solar panels increase or decrease home value, including — location, electricity rate, ownership of solar Panels, condition of solar panels, and how solar panels affect property tax. Also, it’s time to gain knowledge on how you can maximize your solar investment by considering — incentives, credits, rebates, optimal system size, solar battery storage, and net metering.

Is It True Solar Panels Increase Home Value?

Yes, Solar panels increase home value. A study from the Lawrence Berkeley National Laboratory indicated a resale value increase of nearly $6,000 for each kilowatt of installed solar power. Solar-powered homes attract buyers willing to pay more, about $6 per watt of PV installed, which is equivalent to a premium of $20,000 for an average 3.3 kW PV system.

Similarly, a study by Zillow indicated that solar panels installed homes were sold for 4.2% higher value than homes without solar power. For the average-priced home, that comes out to an extra $9,700. However, it varies depending on the locations because some regions like New York City have a higher value of 5.4%, whereas some regions like California have a lower value of 2.7%.

Furthermore, according to the National Renewable Energy Laboratory (NREL), the relationship between annual utility savings and increased home value is reported that every $1 saved annually on utility bills, increases $20 in home value. So, that means a solar energy system which saves about $300 per year would add home value up to $4,000.

A growing demand for homes equipped with solar panels is being observed, especially among buyers who are environmentally conscious and want to benefit from long-term energy savings. If you care about the environment, you should be aware of the environmental impacts of solar energy.

Factors that impact the value of Solar Homes

The added value from solar installations varies based on factors like location, electricity rate, ownership, and condition of Solar Panels along with how solar panels affect property tax. Here are the factors:


A home’s location greatly influences the added value of solar panels depending on factors such as the amount of direct sunlight received, quality, size, number, location of panels, local electricity rates, and the solar panel installation cost. Also, homes and buildings located in areas where sunlight is high and clouds covering are low, tend to harness the sun’s abundant energy.

The concept of peak sun hours lets you get an accurate measurement of sunlight radiation hitting solar panels in the installed location. Hence, you can calculate the expected energy generation for a solar system installed at that location.

Benefits for Homes and businesses, especially in areas where there is high sunlight and increasing electricity rates because solar panels are capable of producing a surplus of electricity. Also, you can sell the excess or unused current back to your electricity provider, by which you can reduce or eliminate power bills. Moreover, solar panels will provide energy independence, reducing your dependency on the grid. In case if you want to know whether your home is suitable for solar panels or not, you can easily determine by calculating Sun number score.

The states with the highest demand for solar panel installations include — Texas, Florida, Virginia, Georgia, and Indiana. However, this demand varies according to favourable geographical conditions. Especially during the peak sun hours in states such as — Arizona, California and Colorado, making them ideally the best for solar panel installations and enhancing the value of solar installations.

The government increased the financial viability of solar-equipped homes in highly solar-demanded areas through the following incentives and policies:

  • Federal Investment Tax Credit (ITC)
  • Modified Accelerated Cost Recovery System (MACRS)
  • Residential Energy Credit (REC) and the Renewable Electricity Production Tax Credits(PTC)
  • State Solar Carve-Out Programs
  • Solar for All Grant Competition
  • Subsidized Loans
  • Tax Exemptions
  • Federal Clean Energy Tax Credit
  • State and Local Cash Rebates
  • Solar+Storage Equipment Expenses in ITC

Electricity Rate

The cost of electricity plays a major role in influencing the financial benefits of solar panels. As the electricity cost rises, the demand for solar panel installation also increases. Hence, homes or businesses will be capable of generating excess electricity that can be sold back to the respective provider, cutting down or nullifying energy bills. Therefore, the higher cost of electricity leads to the greater financial benefits of investing in solar panels.

Areas with high rates are prime candidates for solar installations, as the return on investment (ROI) for the installed solar panels can occur in a short time because of the higher cost compensation.

Installing a solar system will reduce electricity bills and also enhance the property’s appeal to both renters and buyers. As a result, it sets a premium price by increasing the property’s value. However, the exact savings will depend on other main factors, which include — electricity consumption, solar energy system size, local electricity rates, and whether the solar system is owned or leased.

Solar batteries can amplify savings by storing excess energy for use during peak rate times or outages, as these technologies convert sunlight into electrical energy and store it in solar batteries. Hence, this stored energy allows homeowners to reduce their dependence on grid electricity and leads to cost savings.

Ownership of Solar Panels

Solar panel system ownership holds a major role in increasing home value. When you buy a solar panel system from the manufacturer, you become the ethical owner of those panels. Additionally, gaining ownership of the solar panel system increases the value of your home, serving as a long-term investment, and savings and can be beneficial to buyers in the future.

Outright ownership refers to purchasing the solar system outright, either utilizing a loan or by cash payment. If you are the homeowner who has purchased the solar system, then you will benefit from any state and federal tax credits as well as other incentives.

Whereas, a Solar Lease means you can have solar panels installed without upfront cost because it is installed and maintained completely by a third-party owner.

Owning the system is necessary for homeowners to be able to leverage solar incentives including — tax credits, rebates, and net metering programs. Whereas, homeowners who have leased solar systems will not qualify for these advantageous benefits.

Selling homes with leased solar systems can involve many complications because the homeowner should completely pay and clear the lease before selling the home. Another option is that the buyer should be agreeing to take over the lease.

The process of transferring a lease to a new homeowner includes a few procedures to be done, holding potential challenges. However, the new homeowner needs to qualify for a lease-based credit score and when they do not qualify, the original homeowner might have to buy the lease (It can be costly). The most complicated step is that the new homeowner has to agree with the lease terms, which might include regular price increases. Hence, this point can make it feel less attractive and deter buyers from considering buying the home.

Condition of Solar Panels

Solar system’s condition and maintenance is an important factor in affecting property value. Also, many researches have indicated that solar-powered homes can receive numerous benefits, including — reductions in electric bills, no carbon footprints, and possible higher home values.

Well-maintained and well-functioning solar panels with reliable warranty coverage often attract more buyers and increase the value of a home. This makes a solar panel warranty a crucial factor in boosting your property’s value. Homeowners who install solar power systems can potentially earn money by selling excess power back to the grid.

Keeping solar panels in top condition through professional servicing and upgrades has a lot of benefits, such as addressing and resolving issues like debris accumulation, and critter damage. Also, upgrading the solar system according to the latest generation of panels can result in a greater annual Return on Investment (ROI) and enhance the net present value of the solar system.

If an individual decides to buy a property with a solar system, it is recommended to thoroughly review the system documentation. Also, it is very important to go through and understand the panel’s history by going through its maintenance records and the warranty coverage provided. Therefore, by perfectly reviewing these details, buyers get an insight into solar panel condition and performance, as well as a better understanding of the panel’s long-term benefits and costs associated with the system.

How do Solar Panels Affect Property Tax

Installing solar panels has various advantages on a property, of which one of the most beneficial points is that solar property tax exemptions allow homeowners to solar panel systems from the valuation of their home for tax purposes. It means solar panel installation will increase the value of the home, but the property tax will be the same as the home value before solar installation.

Currently, 36 states in the US provide property tax exemption for homeowners who have installed residential solar systems. Additionally, a minimum of 25 states grant a solar sales tax exemption, preventing the inclusion of solar panel purchases from attracting sales tax.

States with the highest solar property tax exemptions are:

  • Arizona
  • California
  • Colorado
  • Connecticut
  • Florida
  • Hawaii
  • Indiana
  • Kansas
  • Louisiana
  • Maryland
  • Michigan
  • Minnesota
  • Missouri
  • New Jersey
  • New Mexico
  • Oregon
  • Rhode Island
  • Texas
  • Vermont
  • Washington DC
  • Wisconsin

It is important to understand the local tax laws and exemptions before going solar because the property tax incentives keep varying by state. In some states, local taxing authorities are granted to allow property tax incentives for solar. However, homeowners must be acknowledged and aware of the specific exemptions and incentives that are available in their area.

How can you Maximize Your Solar Investment?

how can you maximize your solar investment There are several ways like incentives, credits, rebates, net metering, solar battery optimal system size and battery storage through which you can completely benefit from solar panels:

Incentives, Credits, and Rebates

In the United States of America, many incentives and rebates are available to offset the initial expense of solar installations, of which the most popular and common ones are listed below:

1. Federal tax credits provide upto 30% of the solar panel installation cost within the year after installation. For instance, California offers a tax credit of $3 per watt of solar capacity, which amounts to $3,000 per kilowatt.

2. State tax credits allow individuals to earn additional money on income tax after installation. The current amounts of $500 and $5,000 vary based on different state policies.

3. Solar Panel Rebates are direct discounts to reduce the upfront costs of installing an entire system.

4. Solar Renewable Energy Credits (SRECs) is a certificate for generating one Megawatt-hour (mWh) electricity and that can be sold by solar owners for 5–10 years after installation.

5. Performance-based incentives (PBIs) are paid directly to the solar panel owners on their electricity bills in the form of bonuses. In other terms, these payments are set for long-term contracts for small amounts under $0.30 per kWh and solar owners are required to register their SRECs to the utility.

6. Property tax exemptions subtract the included value of your solar system from your taxable income.

7. Sales tax exemptions exempt the gross sales charges on your solar system purchase.

8. Less-interest loans offered by a few states or local governments help to lower the upfront costs of your solar system.

Optimal System Size

Working with a professional installer helps to determine the most efficient system size for your home for the following reasons:

  • Implement years of expertise and experience with an in-depth knowledge of installation techniques and adopting best practices according to the latest industry trends.
  • The high-quality components and materials are utilized due to the priority given to a selection of reliable and durable solar panels, inverters, and other system parts.
  • Minimized risks linked with the DIY installation and safeguards users against potential accidents or damages.
  • Accurate positioning of the panels helps to gain optimal sunlight and generate the highest possible energy and efficiency.
  • Comprehensive warranty coverage thereby ensuring that you get continuous support and assistance throughout the lifespan of your solar system. You will get a prompt and reliable service for system maintenance, troubleshooting, or upgrades.

Having a larger system size might generate more electricity over the available area. At the same time, the roof space requirements are higher due to its heavy weight which poses huge challenges and risks for installation along with additional costs.

Having a smaller system size is a better option if you have a limited budget and roof space. But, less electricity is generated which makes you still dependent on the grid, thereby minimizing financial benefits.

Choosing the best solar panel play very important role to increase overall your home’s value. That’s why it is important to choose right size, type, brand, etc.

Solar Battery Storage

There are several benefits of integrating solar batteries into the system such as:

  • Increased Energy Independence: Excess energy generated by solar panels is stored during sunny days and utilized at night or during outages, thereby increasing energy independence.
  • Lower your electric bills: Storing energy when the electrical rates are low and utilizing it during peak rates can reduce your electricity bills and increase your savings.
  • Maximum return on investment: The excess energy returned to the grid without a battery helps you gain credit through feed-in tariffs, thereby maximizing your return on investment.
  • Low maintenance: Solar batteries require lower maintenance than noisy generators.
  • Environmental impact: Solar systems integrated with batteries rather than a grid can have a positive impact on the environment by reducing carbon footprint which depends on several factors like the solar system size, battery capacity energy and system usage patterns.
  • Increased property value with upgraded solar system: The battery along with an upgraded solar panel system can enhance your property value depending upon several factors like system size and efficiency, property location and the real estate market of your locality.
  • Future Proofing the solar energy needs: A solar system equipped with a battery can help you grab opportunities and enjoy the benefits of future innovations. For instance, the rise in electric vehicles alters the energy requirements of every individual.

There are many types of home solar battery storage system and you should choose carefully according to your requirement.

Net Metering

Typically, Net Metering is a billing mechanism for users that allows them to claim credits for the excess electricity generated through solar panels that are stored in the electrical grid.

Several benefits of Net Metering include:

  • Reduces the battery requirements as well as the dependence on fossil fuels.
  • Financially beneficial for homeowners.
  • Builds a smoother demand curve for electricity generation and allows utility companies to manage their peak electricity loads effectively.
  • Reduces the wear and tear on distribution systems and avoids losses in long-distance electricity transmission and distribution.
  • Transfer of excess power to the grid minimizes the energy charges compared to a non-grid system.

If your solar panels produce less electricity than your residential or business building’s requirements, you can draw the electricity from the grid. However, the surplus energy fed back to the grid, helps you to collect the credits from your utility company that can offset the electricity costs drawn from the grid during peak hours.

Through the Net Metering scheme, you can expand the financial viability of solar panel installation by benefiting huge ROI (Return on Investment), thereby speeding up the payback period.

Buying A House With Solar Panels

Every potential buyer should consider certain factors before purchasing solar panels which include – Environmental impact, Cost Savings, Property Value, Location and Sunlight, Financing Options, Personal Preferences, Energy Needs and Lease Agreements.

Do Bigger Solar Panel Systems Increase Home Value?

Yes, Larger solar panel systems can increase the home value in terms of higher reselling value in the market. Mainly, solar panels attract buyers who prefer lower energy needs with less carbon footprint.

Based on the research of NREL, your home value will be enhanced by $20 for every $1 saved on your energy bills. For instance, your solar energy system saves your budget for $700 approximately as the value of your home increases by $14,000.

Can Solar Panel Decrease Home Value?

Yes, There are certain circumstances where your solar panel value decreases your home value such as:

  • Solar panels are leased or not owned, then it isn’t favourable for some buyers.
  • Improper installation or poor maintenance of panels.
  • Outdated solar system technology.
  • Not aesthetically pleasing for some buyers.
  • Installation in areas where there are lower electricity rates or limited sunlight.

However, these are rare situations and taking proper measures can avoid the drawbacks of reduced home value.

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Ray is an avid reader and writer with over 25 years of experience serving various domestic and multinational private and public energy companies in the USA.

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