Do Solar Panels Increase Home Value?

In this guide, we’ll answer the following:

  • How much do solar panels increase home value?
  • Will solar panels increase property taxes?
  • Do solar panels make sense for you?
Ecowatch Author Josh Hurst

By Josh Hurst, Solar Expert

Updated 5/18/2022

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Do Solar Panels Increase Home Value?

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. Read on for a full explanation of how solar panels affect home value. Or, to consult with a professional and start designing your system right away, you can click the buttons below to get connected with one of the best installers in the nation.

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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.)

If you want to know for sure how solar panels will affect your home value, you can click below to connect with an EcoWatch-vetted installer and get a free estimate.

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:

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.

If you want to know for sure how solar panels will affect your home value, you can click below to connect with an EcoWatch-vetted installer and get a free estimate.

FAQ: Do Solar Panels Increase Home Value?