Do Solar Panels Increase Home Value?

Solar panels reduce your electricity bills and decrease your carbon footprint, but did you know they can also increase the value of your property? 

Whether you’re thinking of selling or simply want to boost your property’s resale value, installing solar panels is a worthwhile home upgrade. In this guide, we’ll look at how much value solar panels can add to your property, different factors that add to the value increase, and how to maximize your solar panel investment. 

Key takeaways:

• Homes with solar panels are valued 4.1% higher than homes without solar panels, and homebuyers are willing to pay an additional $15,000 or more for solar-powered homes.
• The exact value increase of your home will depend on various factors, including where you live, energy costs, and the condition of your solar energy system.
• Not only do solar panels increase your property’s value, they can also help you sell your home faster.
• You can reduce the upfront costs of solar panel investment by taking advantage of solar incentives, tax credits, and rebates.

Do solar panels increase property value?

Various studies (which we’ll highlight below) have shown that solar panels can boost your property’s value by attracting buyers who are drawn to the idea of energy savings and eco-friendliness. The extent of this value increase falls on various factors, including the property’s location, energy costs, and the condition and age of your solar panel system. 

How much value do solar energy systems add to your home?

Let’s take a closer look at the research to see how much value solar panels can add to your property. Various studies have come up with different numbers, but they all point in one direction: solar panels make your home more attractive to homebuyers, and prospective buyers are willing to pay more for a solar-powered home. 

According to the National Renewable Energy Laboratory (NREL), every $1 you save on energy bills through solar panel use adds $20 to your home’s value. So if your solar system saves you $800 per year, your home’s value will increase by $16,000. 

Zillow’s 2021 consumer housing trends report found that 67% of homebuyers considered energy efficiency to be a “very to extremely important” factor when choosing a home. The U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) supports this with a study that found homebuyers were willing to pay an additional $15,000 or more for a home powered by solar energy. 

Zillow’s report also found that prospective buyers would spend 4.1% more for a solar-powered home. With the median U.S. home value sitting around $420,800 in 2024, this could mean an increase of over $17,250. In solar-friendly regions, such as Arizona, this amount was even higher. Arizona real estate expert, Tara Rutkowski, estimates that solar installations can increase home value by $1,000 to $1,500 per kW, depending on the system’s age and energy savings. 

These findings show that solar technology is a win-win for both you and your future home value. Not only do you get to save on energy bills and help the environment, but when it comes time to sell your home you’ll enjoy a property value boost as well. 

Do homes with solar panels sell faster?

It’s clear that solar panels add value to your home. But did you know that solar-powered homes also sell faster than non-solar homes?

In a 2021 survey, Rocket Mortgage found that solar-powered homes sold an average of 13.3% faster than homes that didn’t have solar energy. The same study supported the idea that solar-powered homes sold for higher prices, finding that homes with solar energy systems were 24.7% more likely to sell over their asking price. 

All of these studies make one thing clear: solar panels are an efficient and environmentally-friendly way to upgrade your home for an upcoming sale. 

Why do solar panels increase home value?

What is it about solar panels that makes people want to pay more for a home? When people think of upgrading their home to increase resale value, they usually consider adding a pool or remodeling the kitchen or bathroom. While these costly improvements might appeal to some buyers, the truth is that not everyone has the same taste or wants the hassle of maintaining a pool. 

Solar power (and subsequent savings on energy bills) appeals to pretty much everyone. We all need to power our homes with electricity, and everybody loves the idea of saving money on energy bills. There’s also a select group of the population that’s working to reduce their carbon footprint and attracted to the idea of using renewable energy. For all these people, a home powered by solar energy makes a great selling point. 

What affects value addition from solar?

All homes will benefit from a value increase thanks to solar energy, but the exact amount of that increase depends on various factors. Let’s look at what contributes to the value increase offered by solar panels. 

Location 

Where your home is located can affect how much value solar panels add to your property. In states like Arizona with abundant sunlight, solar panels can generate more energy and provide greater savings on electricity bills. Solar panels can also increase a home’s value in neighborhoods that prioritize environmental sustainability or states with solar-friendly policies.

When it comes to location, solar panels are most in demand in sun-drenched states like Arizona, California, Florida, New Mexico, and Texas. The cities where solar panels are most sought-after are Honolulu, Los Angeles, New York, Phoenix, San Antonio, San Diego, and San Jose.  

If you live in one of these regions, you’ll likely have access to professional solar installers and maintenance crews that can make the cost of solar installation and upkeep easier and more affordable. 

Electricity rates

One of the greatest perks of solar panels (or perhaps the greatest perk, depending on who you ask) is reduced energy bills. This makes electricity prices another important factor in solar panel value addition. If you live in a state with high electricity rates, such as California, Colorado, Florida, or Texas, you’ll likely see a more significant value increase on your home. 

Higher local electricity rates mean greater cost savings from solar energy, making homes with solar installations more desirable in these regions. This, in turn, increases property value as buyers are willing to pay a premium in exchange for the annual savings on utility bills. 

What’s more, many existing solar energy systems were installed under older solar-friendly rate plans with more favorable terms. In some instances, these grandfathered plans can be transferred to a new owner, allowing the buyers  to complete the contract term with the local utility while enjoying a better rate structure than would be available for a new solar installation. This is where it’s critical to work with a solar savvy realtor who will know the details of these older grandfathered plans and how to transfer them to a new owner. 

Leased systems don’t add value 

According to the Berkeley Lab study, people who fully own their solar panels will see a higher value increase on their property compared to those who are leasing. This is because transferring ownership to the new buyer is simple when the system is owned or financed through a traditional loan. 

With a leased solar energy system, the homeowner doesn’t own the panels, so there is no measurable value increase for the property. In fact, leased systems can actually complicate a home sale as the new buyer must work with the solar leasing company to take over the remainder of the contract. They may have to buy the lease out or go through an application process and credit check in order to assume the lease contract. This won’t decrease the value of your home but might add a layer of complexity that slows down the selling process and potentially adds costs.

System size

The size of your solar panel system can also affect how much value it adds to your property. Naturally, a larger solar panel system will result in more generated power and higher electricity bill savings. This means homes with a larger solar system will likely see a higher value increase on their property compared to homes with smaller systems. The size of your home does factor in here, and a smaller, efficient system on a low-consumption home can be as valuable as a larger system on a high-consumption home.

6 kW solar systems are the most popular in the U.S., capable of generating enough energy to power the average household. That said, the size of your solar panel system can depend on how much sunlight your home receives and the wattage of the solar panels you purchase.

See: How Many Solar Panels Do I Need?

Home size & consumption

On the same page with system size, the size of a property can also contribute to how much value is added by a solar panel system. Larger homes tend to use more electricity and see more significant cost savings with solar energy (assuming the solar system size is big enough to cover their daily energy consumption). It’s safe to say that larger homes may see a more significant value increase from solar savings.

System type & condition

The condition of your solar panels can affect how much value they add to your property. Newer systems with more efficient technology will see more value increase compared to older systems or those in poor condition. New homeowners are unlikely to see the value in old or damaged solar panels that don’t work properly or are nearing the end of their lifespan. 

To get the most value increase for your home, be sure to properly maintain your solar panel system for maximum performance and longevity. This includes regular cleaning and inspection. A well-looked-after solar panel system will produce more energy, result in higher cost savings, and therefore increase your property's value more.

The one major exception to this rule is older systems that are grandfathered into older more solar-friendly rate plans. For example, here in Arizona, systems that were installed in APS territory prior to 2017 are likely grandfathered into the older rate plan that offered a full dollar-for-dollar credit for any excess solar energy sent back to the grid. After 2017, those solar buyback credits have been reduced by10% annually. This means that an APS grandfathered system will produce greater return so long as the homeowner or a new buyer doesn’t switch away from that old retired rate plan. 

If buying a solar-equipped home is part of your plan, find a solar savvy realtor who can help you find these homes and move the grandfathered rate plan into your name.  

See more: 9 Ways to Improve Solar Panel Efficiency and Output

Do solar panels affect property tax?

Because installing solar panels can increase your home's market value, your property taxes may also increase. However, several states provide property tax exemptions for solar panel systems. This means that the added value from solar panels isn't included in the property tax assessment, allowing you to benefit from increased property value without a corresponding increase in property taxes. The duration and extent of these exemptions varies from state to state, so it's important to check your local state legislature or speak with a tax professional to understand how it works in your area. 

HoW to maximize your solar power investment

If you’re convinced that solar energy is worth the investment - way to go! You’re committed to a greener future and about to experience lower energy bills and increased property value. Although the upfront costs may be significant, we’ve got some tips to help you maximize your investment: 

• Make use of solar incentives, credits, and rebates: Solar tax credits, incentives, and rebates can significantly reduce the cost of your solar panels and make them more affordable. In Arizona, for example, you can take advantage of the 30% Federal Investment Tax Credit (ITC) of the total cost of your solar system, a $1,000 state of Arizona tax credit, and potentially a utility rebate.Tax incentives can only be claimed by the original buyer. Buyers who purchase a home with panels already installed cannot take advantage of solar tax credits. 

• Net metering: Depending on where you live, you may be able to take advantage of net metering policies which allow you to sell excess solar energy back to the grid, usually in return for credits off your electricity bill. This can further increase your cost savings. In Arizona, buyback credits have been shrinking annually since 2017, but once you’ve locked into a contract with the utility the rate will be fixed for 10 years, and those contacts can be transferred to a new buyer. So getting educated on local net metering rates can not only help you sell a solar home, but it can help you buy one that may be grandfathered into an older more lucrative rate plan. 
• Solar batteries: With a solar battery, you can store extra power generated during the day and use it during evenings, blackouts, or on cloudy days. This maximizes the potential of your solar energy system and allows you to save more on energy bills.

Keep Reading: Solar Panels ROI: Calculating Your Average Returns

Solar panels as an investment for your home

Solar is one of very few home improvement investments that starts paying itself back from the moment it’s activated. Not only will you save money on energy bills and contribute to a greener future, but you’ll also make your home more attractive to buyers, increase the value of your property, and potentially even sell your home faster. 

Before you make the decision to go solar, however, it’s important to consider various factors like how long you plan to stay in your home and how much you currently pay in energy bills. For a comprehensive guide on buying and selling homes with solar, you can download our free guide, Buying & Selling A Solar Home. 

If you’re considering going solar, feel free to contact the team at Sun Valley Solar Solutions for a free quote. We can help you assess the value add of solar panels, how much you can expect to save on energy bills, and which tax credits and incentives you’re eligible for.