Increase home value 3-4% by installing a solar panel system
Multiple studies have shown that homes with solar panel systems are valued and sold at prices above similar homes in their area. They also tend to sell twice as fast as the competition.
Early studies focused on established solar markets such as California found that home values increase by four percent or more when homes are equipped with solar panels. Lawrence Berkeley National Laboratory, a research laboratory affiliated with the Department of Energy, continues to expand on that research as solar grows across the U.S.
The study, conducted by the Lawrence Berkeley National Laboratory in California, examined sales data for almost 23,000 homes in eight states from 2002 to 2013. About 4,000 of the homes had solar photovoltaic systems, all of them owned (as opposed to being financed through a lease with the solar company).
Researchers found that buyers were willing to pay a premium of $15,000 for a home with the average-size solar photovoltaic system (3.6 kilowatts, or 3,600 watts), compared with a similar home without one. Put another way, that translates to about four additional dollars per watt of solar power.
The National Bureau of Economic Research (NBER) Also recently released an analysis that found solar panels add between 3 percent and 4 percent to the value of a home. That result is consistent with a study released in April by Lawrence Berkeley National Laboratory.
The NBER study looked at prices in San Diego and Sacramento, Calif., to measure the effect of solar panels. The homes studied have panels generate electricity (not hot water) and are connected to the grid so households draw from the regular electricity system when panels are not generating.
“Our evidence suggests that similar to other home investments such as a new kitchen, solar installation bundles both investment value and consumption value,” conclude the authors, who are California-based economists. The “investment value” increases the sale price of a home and the “consumption value” is the benefit of having an environmentally friendly energy source
Can your property value increase if you lease your solar panels?
Installing solar panels on your home can increase its value, but only if you own the system. If you install a solar panel system through a lease or PPA, you are essentially “renting” it from the third-party owner. Since you don’t own the system, it cannot be included in assessments of your home’s value. Most studies about solar and home values focus exclusively on owned solar energy systems.
Many of the same factors that drive your overall financial returns also drive increases in property values. Not surprisingly, the largest increases are in areas where electricity rates are high and strong solar incentive programs exist. All of this is great news for property owners with solar PV systems: they not only recoup the initial cost of their systems when they sell, but also receive a premium that will increase their returns on their investment.
Recognizing that solar power systems add value to a property, the real estate industry is working to create more sophisticated methods for accurately determining the market value of solar, as well as the financial value of properties equipped with solar power systems.