Do Solar Panels Increase Your Home Value?

Do Solar Panels Increase Your Home Value?

As a homeowner, there are countless home improvements you can do to increase the value of your home. In today’s real estate market, installing a solar power system is one of the best and most functional home upgrades you can get to increase your home value.

Over the course of the last few decades, solar panels have become a very desirable addition to any home. According to the Solar Energy Industries Association, in 2018 alone, Americans have invested in enough solar power systems to power 12.3 million homes.

It’s not difficult to appreciate the steadily growing market appeal of residential solar energy. As the prices of electricity continue to skyrocket and as traditional sources of energy continue to pollute the planet, residential solar systems have become a way for savvy homeowners to cut down on their electricity costs and cut back on their dependence on fossil fuels and other non-renewable resources.

There are plenty of financial and environmental advantages to installing a residential solar system—for one, it’s confidence-inspiring to be able to power your home without entirely relying on the grid. As with any other home upgrades, however, it’s crucial that you take a moment to consider how installing a residential solar system impacts the value of your home in the long-term.

Home-buyers Appreciate Solar-Added Value

When it comes to home improvement, there’s a line between upgrades that genuinely add value and those that are just really added expenses. While expensive upgrades such as a swimming pool or ornate landscaping may add a certain flair to your home, they may add significantly less than their cost when it comes to the listing price of your property.

A residential solar system, on the other hand, is a functional upgrade that provides real-world and long-term value to both the current and subsequent homeowner—both will get to enjoy the money-and-planet-saving benefits of the solar panels everyday throughout its lifetime. For this reason, home-buyers are more willing to shell out an appreciable amount on a property with a solar panel installation, more than many other upgrades.

According to a CNBC report, 80% of home-buyers today are invested in green living and are actively looking for homes with energy efficient features. While most are environmentally invested home-buyers, even those who are environmentally ambivalent remain highly appreciative of the dollar-saving benefits of solar energy.

How Much Solar Panels Increase Home Value

According to a new Zillow analysis on US homes, most homeowners who have installed a residential solar system to their home not only recouped the entire cost of the solar installation, but also enjoyed a 4.1% average increase in real estate value upon the sale of their property. This is on top of the lower energy bills and substantial tax incentives that pay for the original costs of the solar panels multiple times over throughout its lifetime.

The numbers vary between each installation and property, of course. On average, however, solar-powered homes have seen a $4,000 to $6,000 increase in resale value for every kilowatt of solar panels installed. This means that at $4,000 per kilowatt, a mid-sized home that comes with a 6 kilowatt solar power system would add an average of $24,000 to its market value.

While a solar power system helps save money right away in terms of reducing electricity expenses, there are still a number of solar investments that homeowners can make to get even more value out of their solar installation. Installing a solar battery, for instance, can substantially boost energy savings and reduce power grid dependence.

What Factors Influence the Added Value of Solar Panels

How much market value solar panels bring into your home hinges on a number of factors. Here are some of the things that most significantly impacts how much value a residential solar system will add to your home:


Geographical location is what primarily determines the amount of sun exposure necessary in solar energy generation.

States and places that receive plenty of sunlight are often referred to as active solar markets as these are the places that tend to have the highest solar installation rates and a local government that actively incentivizes solar energy with tax exemptions, energy rebates, and other incentives.

Homeowners who live in active solar markets will get more out of their solar system than those who live elsewhere.

Solar panels are a long-term investment as their average lifespan is anywhere between 25 to 35 years. Depending on where you live, your home’s solar system can remain a cost-saving and income-producing asset for years to come—more on this in the following sections.

Local Electricity and Utility Costs

A sub-factor of geographical location, electricity and utility costs can vary dramatically between different states, even between different places within the same state. The most obvious financial benefit of installing solar panels is the amount of money you save from cutting back on your grid electricity consumption.

Residential solar is worth more in places with higher electrical costs, since the system does a more significant job at offsetting high electricity bills. Overall, as prices of electricity continue to skyrocket the value of solar energy will continue to rise correspondingly as well.

Solar Energy Incentives

Different states have different solar incentives. Solar homeowners who live in states and places that put a premium on both the environmental and social cachet of solar energy will get more value out of their solar panel installation, as they will enjoy more incentives and other policies, including solar property tax exemptions and energy rebates, among others.

Solar Installation Costs

Another geographic sub-factor, the costs of installing a residential solar system varies for individual states and individual communities. In many cases, homes that come with solar installations are looked favorably by home-buyers for having energy-efficient upgrades. Home-buyers tend to be more willing to pay a premium for a home with a system already in place as it can save money on solar installation costs and monthly electricity bills right off the bat.

Solar System Capacity

Not all solar panels are created equal. Some solar panels are designed to be better at converting sunlight into usable energy than others. Most solar panels are capable of producing 250-400 watts of power, with varying levels of efficiency.

The value that solar adds to a home tends to reflect the overall power generating capacity and quality of the solar installation. The energy output of the solar system should be enough to properly power the home in order for the panels to boost the property’s market value.

How efficient a solar panel is ultimately determines how well each square foot can convert sunlight into electricity. Homeowners who install more efficient solar panels will enjoy a higher power rating and will produce more wattage. A residential solar system capable of generating more energy will provide more added value to your home.

Solar System Age

While solar panels do last a long time, their efficiency at converting sunlight into usable electricity diminishes over the course of its lifespan. Homeowners with an older solar power system will need to account for solar panel depreciation. The replacement value of an older residential solar system also depreciates overtime, as older installations tend to have replacement parts that are expensive or limited in their availability. Older residential solar systems wouldn’t add as much market value to a home as a relatively newer solar installation would.

All things being equal, a solar power system installed in 2002 will generate less energy than a residential solar system installed in 2022. Additionally, the photovoltaic technology that underscores solar panel systems have become dramatically more efficient than they were in the past, so the newer panels will generate more energy, and therefore will add more home value.

Solar System Ownership

Homeowners can either buy or lease their residential solar systems. If a home has a solar installation that is owned by the homeowner, then the solar panels add considerable market value to the property.

On the other hand, if a home has a solar system that’s leased by the current homeowner, then the panels don’t actually add any value to the property as the system isn’t technically part of the property. Potential home-buyers also won’t get to enjoy any state or local solar incentives and policies like solar property tax exemptions and energy certificates, as those have been forfeited to the leasing company.

Why Keeping a Solar Record Matters in Selling Your Solar Home

It’s always a good idea to keep any records of your solar installation intact and available for prospective buyers to look at. You’ll want to have these records on hand when selling your home, so you can prove to home-buyers that the solar installation was completed by a high-quality solar company and that it has all the necessary permits and warranties. You’ll also want to keep your power bills as before-and-after proof of your solar energy savings.

Solar Panels are a Worthy Investment

Solar panels are a worthy upgrade that add genuine value to your home. Installing a residential solar power system will save you money on your electric bill, protect you from power outages, and help you do good for the environment.

With lower monthly electricity expenses, tax exemptions, energy rebates, and added market value, you can realistically expect to recover your initial solar installation expenses and enjoy a considerable return on your solar investment.

Solar powered homes, in addition to fetching higher asking prices than no-solar houses, also fast-tracks the selling process as the majority of today’s home-buyers are actively looking into homes that offer sustainable energy solutions.

Matt Hope
Last Reviewed By: Matt Hope
Published: 2022-05-26