Calculating A Ballpark Range For Home Value Increase
Assume our calculator above estimates a 6kW solar panel system would be best for your energy bills of $120 a month.
- You could quickly estimate a $30,000 home value increase from the Lawrence Berkeley Labs formula .
- From the Appraisal Journal article citation, $120 of monthly utility bill savings is $1,440 annually. Multiply that by 20 and you get an expected market value increase of $28,800.
- Finally, using Zillow and the National Bureau of Economic Research study, consider you have a Zestimate of $550,000 for your property. A 4% increase in home value would be $22,000.
In this way, your ballpark estimate for a 6kW would be anywhere from a $22,000 to $30,000 increase in home value.
Solar Panels Add $24000 Dollar Value To Homes On Average
The key finding: on average, homebuyers are consistently willing to pay PV home premiums of approximately $4 per watt of installed solar capacity. For a typical 6-kilowatt solar PV system, this means that solar can add $24,000 to your homes resale value!
Our findings should provide greater confidence that PV adds a quantifiable premium to a wide variety of homes in California and beyond.
-Sandra Adomatis, Co-Author of Berkeley Labs Selling Into the Sun Report
According to the Solar Energy Industries Association, over 2 million U.S. homes and businesses have gone solar! Theres over 71,300 MW of cumulative solar electric capacity operating in the U.S., enough to power more than 13.5 million average American homes. Now is a great time to join the solar power revolution!
Through Q3 2019, Texas installed 3,420 MW of solar electric capacity, ranking it 4th nationally. Theres enough solar energy installed in Texas to power 408,000 homes.
And, since 2010 the average price of a PV solar panel has dropped by 63%!
How Much Are Solar Panels
A solar panel array for a typical family of three in the UK costs between £4,000-£6,000.
This is a large investment, but it enables you to save up to £390 per year on energy bills, all while doing your part to help the climate.
And when you consider house prices, the cost of solar panels pales in comparison.
As of January 2020, the average house price in the UK is £231,185, according to the Land Registry.
So on average, youll be paying a measly 2.1% of your homes value to get solar panels an excellent investment that will quickly produce returns.
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Homeowner/seller Incentives For Installing Solar Panels
In addition to increased property values over comparable non-solar homes in their community, homeowners purchasing solar systems are realizing many financial benefits including:
- Federal solar investment tax credit
- Replacing grid electricity with a sustainable, often cheaper option1
And, as the seller of a solar property, there are tremendous advantages in the real estate market such as:
- Higher asking price than comparable homes without solar4
- Solar panels are viewed as an upgrade by potential buyers8
- Homes with solar panels often sell faster than those without8
- 100% return on solar investment upon home sale1
Homeowners with a solar energy system who may want to sell should note that prospective buyers are interested in documentation showing that the installation was done properly from a reputable solar dealer, and proof that the system is reducing electric bills.8 Sunruns Solar Advisors can show you how to document the cost savings on your electricity bill.
The Future Of Green Homebuying
It is not just solar that is seeing increased premiums for sellers. According to recent studies by the Appraisal Institute, green and energy efficient home improvements like energy efficient appliances and extra insulation have the potential to pay dividends to buyers and sellers. One study showed a 2.19% increase in a sale price premium for green features while Pearl Certified homes could see a sale price premium of up to 5% higher.
Not only are homeowners and homebuyers seeing the value in a green, more efficient home, but local and state governments are also currently incentivizing the move toward renewable energy and energy efficiency while reducing the strain on their electrical infrastructure. With federal and state solar incentives and energy efficient rebates from the Mass Save program, investing in green home upgrades is more affordable and helps to reduce utility costs.
Do Solar Panels Increase The Value Of Your Home
Yes, solar panels will absolutely increase the value of your home. An average-sized solar array can add an additional $15,000 to the cost of a modern home. According to the Office of Energy Efficiency and Renewable Energy , people are more than willing to pay that and more, in some cases. According to Greenlancer, energy-efficient homes have historically sold faster and for more money than those that did not have attached solar arrays.
In 2018, that difference equated to an average of around 4.1 percent. However, that price difference was not the same everywhere. For example, homes in Riverside, Calif. came in at about 2.7 percent more, while homes in NYC were more in the realm of 5.4 percent. Homes in larger coastal cities such as Orlando, Fla. and San Francisco, Calif. usually fetched between 4.4 and 4.6 percent. Thus, the location of a home can seriously impact how much value solar panels might add.
Real Estate And Solar: What Is Happening Now
According to research from Zillow, homes across America that included outright-purchased solar PV Systems sold for an average of 4.1% higher than comparable homes that did not include solar. This pencils out to an average of $9,274 in home value increase with solar.
The Department of Energy did their own independent research on the topic, and found the homeowners were willing to pay up to $15,000 more for a home with solar and there was evidence that these homes sold faster than homes without solar.
More locally, Northeast-based Redfin Realty is reporting that homes in the Northeast that include solar are showing staggeringly high increases, like in Worcester, where the median sale price for solar listings was $42,000 higher than the standard median sale price, and in Boston, where solar homes were averaging a median sale boost of $179,000.
What about how old your solar PV system is when selling your home? Research from Ohio State University, concludes that homeowners would see a decent return on investment whether owning their system for years before selling or selling after just a few years. In the first scenario of long-term ownership, homeowners would likely have a reduced premium but would have benefited from years of reduced or zero electricity bills. While the homeowners with short-term solar ownership would have a higher premium when looking to sell since the system would be relatively new.
Prospective homebuyers see the value in solar
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Currently The Average Us Residential Solar System:
Is about 6.2 kW in size
Based on an average price of $2.70 per kW, a 6.2 kW system costs $16,740, but $11,718 after the 30 percent federal solar tax credits established in 2019.
Since costs differ based on the size of your system and other variables, the information below presents component costs in kilowatts. As a quick estimate in dollars instead of kilowatts, take the total projected cost of your system and use the following percentages to determine how much it costs for each component:
- 30%Solar Panels
- 20%Batteries, Inverter, Controller, Framing & Wiring
- 15%Permits & Fees
- 20%Operational Costs
For example, the overall cost to install a 5 kW system is $13,500. The panels are $2,341 batteries, inverter, controller, framing & wiring are $2,565 labor is $1,345 permits, fees, and taxes are $810 and supply chain and operational costs are $6,480.
After state solar incentives and a 30 percent federal tax credit, the net cost to purchase, install and use this example system for its first year would be less than $9,450.
Saves You Money On Your Electric Bill
After you save enough on your energy bill to recoup your initial investment, running on solar is essentially free electricity for the rest of the panels 25-year lifespan. In the last 15 years, utility rates have increased by about 2.9% every year. The initial upfront price could save you from the increasing utility prices for the next couple of decades. There are also federal, state, and local incentives, such as the federal tax credit that allows you to deduct 26% of the total cost, making them even more affordable for the average homeowner.
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Homeowners Who Made The Solar Switch
Lisa and Jerry Chretien, a couple from Cape May County, New Jersey, decided to lease solar rooftop panels from Sunrun a year ago. High utility bills and the desire to live cleaner and greener lives inspired them to make the decision. Since going solar in June 2018, the Chretien’s electric bills have decreased, especially in the summertime.
“As soon as we would open the pool and turn on the air conditioners in May our electric bills would run close to $800, sometimes more,” said Lisa Chretien. “Saving money, especially with kids in college, has been a big help and a big saving. And there are a lot of incentives, tax wise you get a break. It has just been a plus all the way around.”
For Kerrie Lane, owner and operator of a cleaning service and resident of South Jersey, the experience was similar. After moving into her new home, she received her first electric bill: a staggering $1,100. Kerrie knew she needed to do something to make her electric bills affordable.
“I’m 60 years old, so I’m getting up there. I do a physical job for a living but I can’t do it forever. … So having my bills being manageable was very important to me,” Lane said. “My first electric bill in this house was $1,100. I knew I needed to correct this situation and make it manageable and Sunrun gave me the consistency that I was looking for. “
Do Bigger Installations Increase Home Value
Home solar energy is yours to control while adding property value. Research shows, however, that the wattage generated by a solar installation does not proportionally raise the value of a home. So, installing a massive solar array on your rooftop wont necessarily equate to a higher resale value. A solar installation that sufficiently meets your energy needs is enough for you to recoup the price of your installation.
Different Regions Will Have Different Resale Values
As you contemplate installing solar panels, youre probably already thinking about how much youll save using solar energy. Part of this calculation is based on the climate and terrain of your region.
For instance, my mother, who lives in Florida, will benefit more from solar panels than someone who lives in Alaska. Florida is sunnier more days of the year than Alaska is, and therefore, she will save more money on energy than someone in Juneau.
If you live in a sunny region, youre more likely to recoup your costs for solar power installation. This will also help your resale value more than if you live in a low-light area of the world.
How Much Does Solar Add To Home Value
Various studies have been done to figure the value that solar panels add to a home. Many of these studies are done more frequently in sunny locations than low-light regions, however, so theres a bit of a curve here.
As to the studies, in 2011, it was determined that solar panels added $20,000+ to the resale value.
The installation of the panels cost close to $36,000, minus the federal and local rebates and incentives which brought the cost down to about that same figure.
In more recent years, the cost of installation has steadily decreased in small increments, and the current cost to install a system is about $3 per watt of solar energy plus the generators, contractor fees, etc. The overall cost for the whole system including installation is averaged at $12,810 for an average 6 kW system.
According to the Lawrence Berkley National Lab, a solar power system adds approximately $4 per watt to the home value. That means if youve got a 6-kilowatt system, youre looking at about a $24,000 value increase for your house.
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How Solar Panels Could Add Value To Your Home:
It may not be surprising, but, the main reason solar panels could add value to your home is probably the same reason you got them installed in the first place. Cheaper energy.
Everyone wants to find ways to save on their energy bills. The requirement for properties listed for sale to have an Energy Performance Certificate , makes energy efficiency a key consideration for many people.
By having solar panels, youll gain a better score on your EPC and your property will become more attractive to buyers. Not only that, theyll get the benefits immediately without any of the cost or hassle of installing them.
For this reason, it seems like a no-brainer. Having solar panels adds value to your house, right? Well, possibly, but its not quite as clear-cut as that.
Cost Of The Solar System
Though prices may be dropping, the cost of your solar system will vary depending on the type of system you choose, the size of your system, and your location. Some states have rebates and incentives that reduce the overall cost of solar electricity systems.
In general, the National Renewable Energy Laboratory says a 2-kilowatt system, which should offset the electricity use of an average-sized home, will cost about $8 to $10 per square foot before state and federal rebates and incentives.
Solar panels dont require much maintenance, aside from an occasional cleaning. The price of cleaning should run between $150 and $330, and cleaning should be done on an as-needed basis.
Providing regular cleaning and maintenance to your solar panels may be required if you lease your panels or to keep your warranty current. Read the fine print in your agreement, so youll know if cleaning and maintenance is required .
The EPA offers tax credits to homeowners who install solar energy systems. Until the end of 2019, that tax credit was 30% of the total cost of your solar system. Beginning in 2020, however, the percentage begins to step down. By the end of 2021, the credit disappears completely.
If you install your solar panels in time to receive the tax credit, you can choose to either deduct the tax credit directly from your tax payment if you owe federal taxes, or deducted it from your taxable income when you file your taxes.
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How Much Do Solar Panels Increase Home Value
Youre probably here because youre curious about how much more your home could be worth with solar installed on it. Weve got you covered.
We completed research on how homes are valued with energy upgrades like home solar panels. We found several sources of solid information on the subject and compiled them here. You may also be curious how to compute a rough estimate of your home value increase, so we crafted an easy-to-use guide, as well.
In this article, well review solar and home sale studies from around the country, provide home value calculation examples, and review valuation factors which affect the value of solar homes most.
Which Study Is More Accurate
Both studies contain great news for solar homeowners: adding solar to your home increases your property value significantly. But is the increase a fixed price per watt increase, like the Berkeley study suggests? Or is it a percentage increase like Zillow says?
The Zillow study is essentially just a press release with a single paragraph describing the methodology. This makes it impossible to independently assess the quality of their work.
In contrast, the Berkeley Lab publication is a 40 page formal academic paper with its methodology, assumptions, calculations, and references fully documented.
Because of this, even though the Berkeley study is a couple years older, if you are going to make a financial calculation, we think that the Berkeley numbers are more likely to be trustworthy.
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Us Solar Power Generating Capacity 2010 2021
But the resale value of a solar home depends on a number of factors: The size and age of the installation whether the solar installation is owned or leased availability of federal and municipal tax incentives utility company rates, restrictions or incentives and characteristics of an individual market area. This article offers guidance to help you make an informed decision about going solar.
What Does This Mean For Property Values
All of this growth is important for your house value because of awareness: the more people know about the benefits of solar, the more likely it is that prospective home buyers see your photovoltaic system as a positive addition. The environmental benefits are a big win of course, but for most people solar provides a clear financial benefit that fully pays you back after less than 10 years. After that, youâre essentially getting free electricity.
Free electricity for decades. Hard to argue against the value of that.
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Solar Power For The Home: Benefits
A significant benefit to PV installation is a lower energy bill, but the magnitude of this benefit depends on the amount of solar energy that can be produced given the available conditions and the way in which utilities charge for electricity.
The first consideration is the solar irradiation levels available in the home’s geographical location. When it comes to using solar panels, being closer to the equator is generally better, but other factors must be considered. The National Renewable Energy Laboratory produces maps for the U.S. showing solar irradiation levels the tools on its website provide detailed solar information for specific locations within the U.S.
Similar maps and data are available in other countries as well, often from government environmental agencies or renewable energy organizations. Equally important is the home’s orientation for rooftop arrays, a south-facing roof without trees or other objects obstructing sunlight maximizes the available solar energy. If this is not available, panels can be mounted on external supports and installed away from the house, incurring additional costs for the extra hardware and cables.
The final benefit is the potential effect on a home’s value due to the addition of a solar array. In general, it is reasonable to assume that solar panels would raise the value of most homes.