Over the past decade, more and more potential buyers are willing to pay more for houses equipped with photovoltaic (PV) panels. The energy savings associated with solar, as well as the growing interest in environmental sustainability, are among the reasons why.
But the size of this premium and the potential energy savings generated by a solar home system vary widely by location. To understand how solar panels increase the value of a home, several factors must be taken into account.
How much do solar panels increase the value of a home?
Interest in residential solar power has grown significantly in recent years. According to a 2019 Pew research center investigation, 46% of homeowners said they had seriously considered installing solar home panels in the past year.
In a 2015 to study, researchers at Lawrence Berkeley National Laboratory deployed seven evaluators to assess the value added by a photovoltaic panel system to single-family homes in six different states. They found that homebuyers were willing to pay an average of $ 15,000 more for a home with a typical system size of 3.6 kilowatts.
Likewise, a analysis by the online real estate market Zillow found that between March 2018 and March 2019, homes with solar power systems in several in-demand real estate markets across the country were typically selling for 4.1% more than similar homes. without solar power, about $ 9,274 on average. .
The premium varied considerably depending on the market. In Zillow’s analysis, homes in Riverside, California, and Orlando, Florida, had a premium of about $ 10,000 and $ 11,000, respectively. That premium more than doubled in hot markets like Los Angeles ($ 23,295) and New York ($ 23,989), while San Francisco homes with PV enjoyed a whopping $ 41,658 premium over others. houses.
Sunny Arizona Can Offer Best Value: A 2017 to study a sample of homes there found that solar panels producing electricity offer an average premium of around $ 45,000, or 15% of the median home value.
On the other hand, homeowners in states with few financial or regulatory incentives for solar power may find the potential. reduced premium.
Factors That Influence Home Value
Why are many potential buyers willing to pay a hefty premium for homes with preinstalled solar panels? There is no single explanation. Certainly, as residential solar power becomes more mainstream, buyers increasingly see it as an upgrade, a home improvement that can generate long-term income.
Solar energy is now the cheapest form of electricity in most of the world. Homeowners can save a flat fee on their electric bill over the life of their solar system. Exactly how one can save depends on location, electricity use, and other factors, but many potential buyers know that a solar-powered home with a newly installed system will often be worth more than the premium ‘they pay for it in the long run. Simply by visiting the Utility Tariff Database, they can find out how much the power company will reimburse them to send the excess energy generated by the solar panels back to the grid.
In many parts of the United States, there are other potential financial incentives associated with solar power generation. If you live in an area that offers renewable solar energy certificates (SREC), for example, you may be able to earn extra money by selling them to your utility. Prices vary, but in some states SRECs can be worth over $ 300 each. Many homeowners generate enough solar power to acquire several SRECs per year. The Database of State Incentives for Renewable Energy and Efficiency provides a breakdown of state incentives for renewable energy and energy efficiency.
No installation required
The most intimidating aspect of using solar power at home is usually the start-up costs and paperwork, so buying a house with photovoltaic panels already installed and producing cheap electricity for years to come. even decades, is an attractive selling point for many buyers.
The inverters needed to convert solar energy to electricity will last a decade or more, while solar panels are generally guaranteed to last 25 years and will often last longer, but with reduced efficiency. The installed panels are also easy to maintain; the rain washes away the panels and the snow melts quickly.
For many potential buyers, buying a solar home is a win-win solution: they save on electricity costs and have the satisfaction of knowing that they are helping to reduce greenhouse gas emissions and the atmospheric pollution.
According to the National Renewable Energy Laboratory, the average American household can significantly reduce their annual carbon dioxide emissions by switching to solar electricity. But that’s not all: Sulfur dioxide and nitrogen oxides emissions, which can lead to respiratory disease and cardiovascular disease, are estimated to drop by 80 pounds and 50 pounds per year, respectively.
Given the financial incentives, homeowners looking to increase the value of their home and save money on their electricity costs in the meantime can consider the potential benefits of installing a solar system.
Although it is rapidly gaining popularity, solar power will not be attractive to all potential buyers. Some buyers may not like the look of solar panels on a home, may have concerns about repairs and maintenance, or may be reluctant to make a long-term commitment to solar.
Also keep in mind that there is a difference between a residential solar system that the owner owns and one that is rented. The latter may not add value to a home, and some buyers may be reluctant to take over a solar lease, which has credit requirements that not everyone is entitled to.
Local real estate agents familiar with solar home sales can help assess local demand for residential solar and find out what type of high end homes with solar systems are selling in the market. A knowledgeable assessor can also help identify and assess value of the green features of a house.