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Do Solar Panels Increase Home Value?

The history of solar panels actually stretches all the way back to 1839, when a young physicist named Edmond Becquerel observed and discovered the photovoltaic effect. This process produces an electric current when exposed to either radiant energy or light. As early as the 1860s, a French mathematician was registering patents for solar-powered engines.

While it’s taking a while for solar-powered energy to become accessible, available, and affordable to the masses, it has experienced a tremendous boom in the last twenty years. According to the U.S. Office of Energy Efficiency and Renewable Energy, it is expected that more than one in seven homes in the U.S. will have solar PV systems on their roofs by 2030.

If you are thinking about installing a solar system on your home, you’re probably wondering whether or not you can expect any return on investment when you finally decide to sell. This is an important question as buying solar panels and installing them is a big investment.

Do solar panels increase home value? Let’s take a look at what you need to know.

Types of Solar Panels and Systems

You have a number of options when it comes to solar panels and systems. The material of your solar panel as well as whether or not you are hooked up to the grid can have a big impact on both the cost and the efficacy of your system.

Solar Panel Options

The technology of solar panels is ever-evolving and becoming increasingly accessible to consumers every year. There are two many types of solar panels that are available on the market today.

The first type of home solar panels you can buy are silicon panels. There are two different forms of these panels, which are monocrystalline and polycrystalline. Some claim that both of these types of panels tend to have similar performance.

Polycrystalline panels are the most commonly used panels today even though monocrystalline panels have been around longer. It is said that the most efficient panels on the market are silicon panels, with a range of efficiency falling between 18% and 22%.

Thick-film solar panels are the other option when it comes to panel types. You can usually find this type of solar panel on products like solar tiles or solar shingles. They are both less efficient and less expensive to produce.

The efficiency of this type of panel is said to be between 11% and 13%. This means that your panels won’t be able to generate as much electricity as silicon panels under the same conditions.

Solar System Options

There are two different options when it comes to installing a solar system on your home. Some people choose to connect their solar system to the utility grid of their municipality. When they generate excess electricity, they then sell it back to the utility company.

The other option is an off-grid system. This is usually combined with a backup generator and a series of batteries. This allows you to have power overnight when the sun is down or on cloudy days.

The least expensive and most common option is grid-connected systems. This is because they don’t require nearly as much maintenance or equipment as an off-grid system. When you use a grid-connected system, you can use renewable energy to power your home when the sun is out and you can sell your excess electricity back to the utility company when you produce it.

When the sun isn’t out, you can use electricity from the grid. This means that you don’t have to worry about purchasing expensive equipment such as batteries for storing excess electricity.

Off-grid systems typically make sense for homes that are located in very remote places. They might find that it is cheaper to set up an off-grid solar system than it is to connect a power line to the home. Per mile, connecting a power line usually costs somewhere between $15,000 and $50,000.

Setting up an off-grid system requires additional equipment including a charge controller, batters, safety equipment, instrumentation, meters, and power condition equipment.

How Much Do Solar Systems Cost?

The cost of having solar systems has gone down a lot in recent years. This is because the U.S. solar industry has grown at an incredible rate in the last several years.

How much it costs to get home solar panels will depend on a number of factors. These include the location of your property, the size of your system, and the type of system you choose.

Many states offer incentives and rebates that can make it quite a bit cheaper to have a solar system.

The National Renewable Energy Laboratory estimates that a two-kilowatt system costs roughly $8 to $10 per square foot. This amounts to between $16,000 and $20,000. This estimate refers to the cost before any federal or state incentives and rebates are taken into account.

Tax Credits

Homeowners who install solar energy systems can get tax credits from the EPA. This credit disappears by the end of 2021, though, so now’s the time to act if you’re interested in this incentive. You have to install your solar system in time to receive this tax credit which can then be deducted from your taxable income or deducted directly from your tax payment.


One of the nice things about solar panels is that they actually don’t require very much in the way of maintenance. They do need to be cleaned occasionally, which typically costs somewhere between $150 and $330.

You’ll want to read the fine print in your agreement with the manufacturer of your solar panels. It might state that you are required to perform regular maintenance and cleaning in order to keep your warranty current. This also might be required if you lease your panels.

(Are you interested in selling your house fast? Check out this guide on how to price for a fast sale.)

How Much Money Can You Save With a Solar System?

Your local electricity rates and how much it cost you to install your system will impact how much money you are able to save this way. It also has to do with how much sunlight your home typically gets during a normal year.

For example, the average homeowner in San Diego can save $500 per year. The local rates for electricity here cost roughly $0.12 per kilowatt-hour. As a sunny place with more expensive electricity, this can lead to bigger savings than a location that is less sunny and has cheaper electricity.

You can compare that to Seattle, Washington. The average homeowner can save less than $150 per year with a solar system. Not only is it less sunny here, but the electricity rates are typically about $0.06 per kilowatt-hour.

(Wondering what you should fix up when you’re selling your house? Check this out.)

Do Solar Panels Increase Home Value?

In short, the answer to “does solar increase home value?” is: yes. However, before you start setting up your installation, you’ll want to learn a bit more and consider your particular situation.

You can understand why this might be by doing a quick thought experiment. Imagine that there are two identical homes that are on the same street, right next to each other. You are considering purchasing one of them.

The only thing that distinguishes these two homes is that one of them can completely eliminate a $200 electricity bill every month because of a solar system.

That means that you as the prospective buyer can save $2,400 every year if you choose to buy the home with solar panels. As you can see, the obvious choice is to buy a house that will cost you less in your utility bills.  This makes the home more appealing to more people and therefore can lead to an increased home value.

There are essentially two different ways that solar panels can create a return on investment for you. Firstly, it can save you money on your utility bill. However, it will likely take a while to recoup the amount of money you put into the system and break even.

Secondly, you can see a return on investment when you sell the property.

In the next section, let’s take a look at exactly how much value can be added to a home with the addition of solar panels.

How Much Do Solar Panels Add to Home Value?

Do solar panels add value to a home? Typically, yes.

A number of studies have looked into the specifics of how much solar panel ROI is common. Research done by David Kaserman and Ruth Johnson found that for every dollar saved on energy costs per year, the value of a home increases by $20. While this might not sound like much, it actually means that if a solar system is saving a family $200 a month in savings then the house is theoretically worth $48,000 more.

Another study found that for every kilowatt of solar installed, the resale value increased by $5,000. This means that to reach the same increase as in the study above, you would need to install a 9.6-kilowatt system.

To install a system of this size would usually cost about $33,600 or $3,500 per kilowatt. This means that for every kilowatt of installed solar, you net $1,500.

All of that doesn’t include the federal investment tax credit that you might qualify for. This gives you the ability to recoup 26% of the installation cost. In a number of states, too, the increase in property value you gain is exempt from resulting in additional property taxes.

All that being said, the location of your home and how appealing a solar system is will have a lot to do with the answer to “does solar increase home value.” Installing a solar system isn’t exactly a decision you want to make in haste, and it’s a good idea to talk to a local real estate agent to learn if this is something that is attractive to buyers in your location.

You solar panel ROI is going to depend on a number of different factors. In general, you can expect somewhere around a 20% ROI in the first year but some homeowners might find that an expensive installation or expensive electricity shifts this percentage significantly one way or the other.

(Are you wondering how else you can increase home value? Check out this article.)

Are You Thinking About Selling Your Home?

So, do solar panels increase home value? The consensus certainly seems to be that this does in fact increase home value. However, there are always other factors to take into account when you are making an investment into your home with the hope of receiving a return on investment.

While googling “does solar increase home value” can be a good place to start, it’s not a bad idea to consult with a local real estate agent. You can do this even if you aren’t thinking about selling in the near future. They will be able to let you know whether or not installing solar panels is a feature that is appealing to the typical homebuyer in your region.

Another thing you will want to think about is how much energy you can reasonably expect to harness from the sun. In places like Phoenix or Yuma, you can expect that your panels will get a healthy dose of sun regularly. Cloudy locations further north, however, might mean that your return on investment isn’t nearly as good as you might hope.

Are you thinking about selling your home but don’t want to deal with the headache of a traditional listing? Are you ready to sell your house fast and move on with your life? If so, check out our free home value estimator so you can learn how much an iBuyer would purchase your home for!

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