Do Solar Panels Increase Home Value? [2021 Guide]

Before installing a residential solar system, you may stop to wonder: Do solar panels increase home value? It turns out, the answer is a resounding yes.

In this article, we’ll go over how much solar panels can increase the value of your home, as well as how that increased value affects property taxes and whether buyers are really looking for homes with
solar energy systems. With this knowledge, you can make an informed decision about whether solar panels are a good investment for your home.

How Much Do Solar Panels Increase Home Value?

Many homeowners, buyers, and appraisers know that the installation of solar panels and
solar batteries can increase a property’s market value. In fact, one study confirmed that solar installations increase a home’s resale value by up to $5,911 for each kilowatt of solar panels installed, and another estimated an increase of 4.1% of the home’s value.

Where do these figures come from, exactly? To begin with, consider a Zillow study, which notes that homes with solar installations tend to
sell for about 4.1% more than homes without. Of course, this is an average. Some locations show a higher value-add (5.4% for New York City), and some show lower (2.7% for Riverside, California). An older study from Lawrence Berkeley National Laboratory reveals an increase in resale value of approximately $5,911 for each kilowatt of solar power that’s installed.

So, how much do solar panels increase home value? Let’s take a look at some averages:

Home Solar System Size Amount Solar Panels
Increase Home Value*
4 kW $23,644
6 kW $35,466
8 kW $47,288
10 kW $59,110

*Figures based on study by Lawrence Berkeley National Laboratory.

It’s worth noting that these amounts are roughly in line with the total
cost of a solar panel system, which may be just the incentive you need to finally take the plunge into solar power.

Factors That Influence the Value-Add of Solar Panels

While these simple calculations can give you a ballpark, there are a number of factors that influence the value-add of solar panels. Some of the most prominent include:

  • Geographic location: Different communities experience different electrical costs (and higher electrical costs result in greater value from your solar panels). Additionally, geography can influence the amount of sun exposure you get, as well as the social benefits of installing solar power.
  • Local solar installation prices: Another geographic factor is the cost of getting a new system in your area. If a buyer would save money by purchasing a home with a system already installed, it will make your home that much more valuable.
  • System output: As you can see from the chart above, a larger system with more energy generation will provide more added value.
  • System age: If you have an older solar system, you’ll need to account for depreciation. Older systems won’t add that much value to your home when you sell it, as there’s a higher chance the buyer will need to do repairs or replace parts sooner.
  • System replacement value: Along the same lines as system age, how expensive or difficult parts of your system would be to replace affects the added value of the system overall.

Are Buyers Looking for Homes with Solar Panels?

Another question to consider when figuring how much solar panels would increase your home value is just how enticing a solar system is to buyers in your community. This is something that will vary by geography, and specifically by local solar literacy. Simply put, buyers won’t be as willing to invest in a solar system if they don’t really understand
how solar panels work or how they can benefit from them.

With that said, there’s some data that shows homeowners to be pretty open to energy efficiency features, for the most part. For example, more than 80% of homebuyers say that energy efficiency is a priority, according to the Zillow Group Consumer Housing Trends Report.

Some earlier data from the National Renewable Energy Laboratory shows that homes with solar panels
sell 20% faster and for 17% more than those without. (Granted, this information is about 15 years old; there’s now greater supply and greater demand for homes with solar panels, but these data points should be promising nonetheless.)

How Do Solar Panels Affect Property Taxes?

Of course, when your property values go up, that usually means that your property taxes increase as well. The good news is that many states offer exemptions, meaning that when you install a solar system, your property taxes do not go up, even if your property value rises.

Here’s a rundown of property tax exemptions by state:

Solar Property Tax Exemption States*
100% exempt Arizona, Colorado, Connecticut, District of Columbia, Florida,

Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota,

Missouri, New Jersey, New Mexico, Oregon, Rhode Island,

Texas, Vermont, Wisconsin
Local exemptions Alaska, Hawaii, New Hampshire, Ohio, Virginia
100% exempt for 20 years Massachusetts
100% exempt for 10 years Montana
100% exempt for 5 years Iowa, New York, North Dakota
100% exempt until 2025 California
80% exempt North Carolina
System-based exemption Illinois, Nebraska, Tennessee
Tax exemption of $50,000 or 70%

of total property value
South Dakota
No exemption Alabama, Arkansas, Delaware, Georgia, Idaho, Kentucky,

Maine, Mississippi, Nevada, Oklahoma, Pennsylvania,

South Carolina, Utah, Washington, West Virginia, Wyoming

*Accurate as of date of publication.

Do Solar Panels Make Sense for Your Home?

As you weigh the
pros and cons of solar energy, it makes sense to consider the overall impact on your property value. You’ll also want to take into account factors including:

  • How much you spend on utility bills each month: If you live in an area that has high average electricity rates, you’ll get a better return on your solar energy investment.
  • How much sunlight your home gets throughout the year: Some homes are better positioned for solar panel installation than others. If your home is situated at an optimal angle for harnessing the sun’s energy, it makes more sense to go solar.
  • Financial incentives available to you: All American homeowners are eligible for the federal solar tax credit, but many states and municipalities have added rebates, low-interest loans and other financial incentives for their own residents as well.

For many homeowners, the question of whether to
buy solar panels comes down to cost. If you want to see how much solar panel installation would cost for your home, you can get a free, no-obligation quote from a top solar company in your area by filling out the form below.

FAQ: Do Solar Panels Increase Home Value?

Do solar panels hurt the resale value of your home?

Generally speaking, the opposite is true; installing a home solar array actually increases the resale value of a home, particularly if you have a high-efficiency system that helps lower monthly energy bills.

Solar literacy in your local community is an important factor here, but for most homeowners, the answer to this question will be a resounding no. Multiple studies have shown that buyers are looking for more energy-efficient homes to reduce their carbon footprints and help save on electricity bills.

Do bigger solar installations present a better value-add than smaller systems?

Bigger solar installations may present a better value-add than smaller systems. However, in many cases, it’s not the number of panels that matters so much as the power output. A smaller system, assembled with the
most efficient solar panels can be just as impactful as a larger, lower-efficiency system.

The aesthetics of the system may also be a factor, with many buyers actually preferring smaller, less conspicuous systems.

How much value does solar add to the home?

A few studies have shown that solar installations increase a home’s resale value by up to $6,000 for each kilowatt of solar panels installed, or by about 4.1% of the home’s value. However, this can vary quite a bit from one geographic location to the next, even for comparable homes with similar solar panel systems.

Do you really save money with solar panels?

While the initial investment may be steep, solar panels can definitely help to significantly reduce or even eliminate your monthly electric bills. These ongoing energy savings are a nice addition to the elevation in property values.