Solar Panels and Home Value

The most important consideration for most homeowners and solar is the impact going solar will have on their home. That fear is what makes adopting a solar energy system challenging.

A home purchase can be seen as a way to provide a nest egg for the future and an avenue to building equity. For anyone looking to make any significant adjustments to their home, it could be daunting, even if it is adopting a solar PV system. Prospective solar customers have valid concerns that range from the impact on their home value, finances, to how it impacts the resale value of their house.

Numerous research articles provide compelling data about how adding solar panels can increase your home value. We highlight some facts about how solar impacts your home value–and the studies behind them.

Impact of Solar Panels on your Home

Installing solar panels on your home’s roof will improve your home in numerous ways, particularly in two major ways. When you install solar panels on your roof, your:

  • House will sell for more
  • The house will sell faster
  • How easy it is to transfer the solar panel system to the new owner
solar panels for home los angeles

House Will Sell for More

Lawrence Berkeley National Laboratory (Berkeley Lab) is a Department of Energy (DOE) Office of Science lab managed by the University of Cal. It is highly accredited, with more 13 Noble Prizes associated with the Berkeley Lab.

Berkeley Lab, conducted a study to analyze the impact that solar would have on home sales. They analyzed 22,000 homes sales in 8 states. Four thousand of which included solar PV systems, from 2002 to 2013. Based on their research, in 2015 they released their findings in a study called, Selling Into the Sun: Price Premium Analysis of a Multi-state Dataset Of Solar Homes.

The analysis determines that each found that each watt (1/1000 of a kilowatt) of solar increased a home’s value in California by an average of $4 and an average of $3 per watt elsewhere. For most single-family homes, they typically average a solar PV system size of around 5kW. Therefore, the average home outside of California will increase by $15,000 ($3 x 5,000 watt for the average system size) and $20,000 in California ($4 x 5,0000 watt).

An award-winning article published by The Appraisal Journal – the nation’s largest professional association of real estate appraisers, titled An Analysis of Solar Home Paired Sales Across Six States, highlighted similar findings as those produced by the Berkeley Lab.  They examined the sale of homes with solar PV systems in six different states ranging from 2010 to 2014 and found that properties with PV systems sold at a premium across all six states. Their findings highlighted an increase of 3.74% of the average sale price for homes with solar PV systems, a premium of $14,329 on each sold home with Solar PV Systems on average.

Their House Will Sell Faster

The National Renewable Energy Laboratory (NREL), conducted a study based on a national sample across 87 utilities in 16 states. Their analysis found that:

  • Looks of a PV System were not seen as an obstacle to purchasing
  • Presence of a PV System did not damage the Value
  • Homes with solar PV Systems sold for a 17% Premium
  • Homes with a Solar PV System sold 20% faster!

If a solar PV system was previously installed, buyers were more likely to purchase a home that had solar versus a home without.

Payoff the Cost of the System During the Home Sale

The $15,000-20,000k increase in the premium of the sale price found in the Berkeley Lab study, Selling Into the Sun: Price Premium Analysis of a Multi-state Dataset of Solar Homes. With how the average cost of a new 5-6kW PV system is between $16,260 and $21,420 (before the 30% Investment Tax Credit (ITC), also known as the Federal Solar Tax Credit), it is a good bet that the homeowner will make back the money from their initial investment in the resale. Homeowners can typically recoup their investment Solar PV system within seven years if they don’t utilize any financing for solar.

Impacts to These Metrics

There are numerous factors and considerations with regards to the sale of these PV systems. As a homeowner, you should be aware of the various aspects that can impact your financial payback and impact on your home.

Solar PV Systems are a great idea to improve the environment, reduce your electricity costs, and to gain protection from continuous electricity rate hikes. There are a few factors that may influence the extent that a PV system adds value to a home and determine if it makes sense for you. Here are a few considerations your customer may want to be aware of when considering the increased home value solar may provide.

Electricity Costs Matter

The impact that solar adds to the value of the property can be affected by electricity costs and areas with active solar incentive programs. Areas with high electricity prices can accelerate the savings that PV systems and offer an incentive to a buyer since they can imagine the electricity savings that they could experience throughout the years. The costs make an impact even at the beginning and end of the appraisal process.

Even during the home purchase and sale, electricity costs can matter as well. In certain areas with higher electricity costs, appraisers will factor in a solar PV system and directly impact the home value during the appraisal process.

Furthermore, according to the APB Valuation Advisory: Valuation of Green and High Performance Property: Background and Core Competency,when an appraiser considers the role of a solar PV system into the home’s appraisal value,  an appraiser needs to consider potential operating cost savings which may result from energy efficiency upgrades in the valuation process. They must conduct adequate market research to support market-derived adjustments to a gross rent-multiplier, discounted cash flow analysis, or similar income-based valuation techniques.

Tip: Green and energy efficient are not synonymous. Energy-efficient buildings are not necessarily green. While green buildings are typically expected to be more energy efficient than their conventional counterparts, it is essential for the appraiser to ascertain to the extent possible whether or not a green building is more energy efficient than its peers.

System Size

One factor found to affect the resale value the wattage capacity of the PV.  The Berkeley Lab study also found value corresponded to the capacity in terms of watts of the PV system, which makes sense since larger system size and capacity can offset more electricity costs. Therefore, more homeowners should try to offset more than 100% of their electricity usage. Not only can they offset the increase in consumption the moment they go solar, but their home value will also increase in kind.

Technology today has increased substantially where historically the average panel installed would be able to produce approximately 200 watts vs 300 per panel today. So we now require fewer panels but still match the same wattage. Therefore, the size of a system needs to be considered in terms of wattage vs. the number of panels. Read about how to properly size your solar energy system.


The age of a solar PV system can impact the value that it adds to the premium of a home. This may be offset by the warranty obtained when the solar system was purchased as well as how much depreciation that solar system may have experienced. This is further supported by a Berkeley Lab research note on how the depreciation of a solar PV system may decrease the value added to the home during an appraisal but is unclear as to the extent since there has been little research conducted due to the immaturity of the American solar market and home sales.