How much do solar panels increase your home value?
Solar panels raise your home’s property value. But how much?
Energy-efficient home improvements, including installing solar panels, are a great way to increase your home value. But how much value do solar panels really add to your home? How do the installation, financing, electricity reimbursement, and taxes work when you add solar panels to your house?
We are here to walk you through the process.
Takeaways:
Solar panels increase home value by an average of 4.1%
Installing solar decreases monthly utility payments and improves your carbon footprint
How solar panels increase your home value varies by the availability of good sunlight to turn into electricity, tax benefits in your area, & age and size of your home
Solar panels must be well-maintained in order to get the most impact on your home value
Overview: How solar panels increase home value
When it comes to increasing the value of your home through solar panel installation, there are several factors to consider. The size and age of the house play an important role in determining its overall worth. In addition, location is always key - both in terms of home values in the area and access to direct sunlight needed for solar panels to effectively generate electricity. Finally, it may be necessary to make upgrades to your roof or surrounding landscape for optimal results – all factors that should be weighed carefully during install preparation as they can affect final pricing.
An overview of home solar electricity panels
Types of solar panels and solar systems
Solar panels have become increasingly popular in recent years as more and more people seek to reduce their environmental impact. There are two types of solar panels that are commonly used in solar systems: monocrystalline and polycrystalline. Monocrystalline panels have been around the longest, but polycrystalline is what’s most widely available on the market today. Both types are made from silicon and operate similarly with efficiency ratings ranging from 18-22%.
The type of panel you choose depends on your budget, how much energy you need, and the size constraints of your property. Monocrystalline panels generally cost more than polycrystalline, but they may also be space efficient; one monocrystalline panel may produce a better energy output than two or three smaller polycrystalline panels combined due to its higher efficiency rating. It’s important to consider all factors when choosing which type of panel is best for your solar system needs.
Grid-connected systems are the most ubiquitous and cost-effective type of renewable energy system available. Using solar, wind, or other sources of renewable energy, these systems utilize specialized equipment to convert renewable energy into useful electricity that can be used at home. This electricity is then fed back into the grid when it isn’t needed at home, making them a great choice for efficient use of resources and cost savings.
Grid-connected systems are much more economical than off-the-grid systems because they require fewer components and have lower maintenance costs. Additionally, having access to the grid ensures if the weather does not cooperate for generating renewable electricity—such as cloudy days with little solar radiation—electricity is still available when needed, eliminating the need and expense of storage devices such as batteries. Overall, grid-connected systems offer excellent value in terms of power generation efficiency and economic viability.
Off-grid systems are a great way for homeowners in remote areas to hook into energy sources without spending an arm and a leg. Instead of having to run expensive power lines from the main grid to their home, they can create their own off-grid system that is tailored to their needs. These systems include solar panels, batteries, charge controllers, power-conditioning equipment, safety equipment, meters, and instrumentation that allow users to have the electricity they require without being hooked up to traditional utility companies.
Cost of solar panel installation and maintenance
Installing solar panels on a house is an investment in clean energy that can end up saving money in the long run. However, the initial cost of a solar system varies depending on the size, type, and location. The National Renewable Energy Laboratory estimates that a 2-kilowatt system should cover most of the electricity use of an average-sized home, and will cost about $16,000-$20,000 before state and federal rebates and incentives are taken into account.
In some states there are incentive programs for renewable energy sources like solar power; these incentives can help homeowners reduce their cost upfront and receive credit for excess energy supplied back to the grid. However even with state and federal incentives, the amount received may not be enough to make installing solar panels viable unless homeowners have additional cash to cover upfront costs before they start seeing any return on investment. Therefore while the potential savings from a solar system may be worth it in the future, homeowners still need to consider if they have enough funds available or can make arrangements for financing when deciding if now is the right time to go solar.
Providing regular maintenance of your panels may be necessary in certain scenarios, such as if you are leasing them or need to renew the warranty on your system. Be sure to review the paperwork associated with either situation so you know what is required in terms of maintaining it. Despite a low requirement for general upkeep, providing care for your solar power system will ultimately help provide long-term energy savings while preserving its quality and efficacy throughout its lifetime.
Financing solar panel installation
Most states have loan programs and incentives available to help homeowners take advantage of solar energy. Loans are a great way to finance your system if you’re able to qualify. They usually carry lower interest rates than personal loans, can extend repayment terms up to 25 years, and typically cover the full cost of installation and maintenance. Solar leases are also another financing option that allows homeowners to rent their solar system and pay a monthly fee rather than making an upfront purchase. In most states, homeowners can receive additional incentives such as tax breaks or credits when they lease their solar system.
For many homeowners, utilizing home equity to finance the installation of a solar system is an attractive option. Home Equity Lines of Credit (HELOCs) are popular lending products that allow people to borrow against the equity in their home at a lower interest rate than an unsecured personal loan. When compared to solar loans, interest rates on home equity loans and home equity lines of credit are similar or slightly lower. In most cases, HELOCs provide more flexible repayment terms than other loan products, so they can be a good option for those looking to finance a solar system.
Figure's online HELOC offers competitive interest rates and payment flexibility from the comfort of your home. It's a great alternative to state and company solar panel loans and can help you access up to $400,000, depending on how much equity you have built in your home. This is a great option if solar panels are part of a bigger remodeling project.
Tax benefits of home solar electricity systems
The EPA has offered a significant incentive to encourage people to install solar energy systems in their homes. The incentive, in the form of a tax credit, has been at 30% of the cost since 2005. It will continue to be 30% until 2033.
When you get your system installed quickly enough to receive the tax credit, you have two options as far as taking advantage of it: you can either deduct it from your federal taxes if you owe any or have it deducted from your taxable income when filing taxes. This feature allows solar installation to be more accessible, therefore making it an attractive choice for homeowners with tight budgets.
How do solar panels increase home value?
Installing solar panels on one’s home offers many advantages that go beyond reducing energy costs and emissions. Not only will having solar panels result in long-term energy savings, but it also significantly boosts the home’s property value Studies have also shown that homes with solar panels are more attractive to buyers and can generate a higher sale price than those without.
A report published by the Appraisal Institute showed that homes with solar panel installations sold for an average of 4.1% more than comparable homes without solar panel installations. Additionally, Zillow estimated that on average, installing solar panels could increase a home. According to the National Renewable Energy Laboratory (NREL), each dollar saved on energy bills can appreciate the value of a home by approximately $20. Therefore, if a homeowner invested in a solar panel system that resulted in annual savings of $700, their home could potentially increase in value by a hefty sum of $14,000!
Real estate agents and appraisers have found that having solar panels on one’s house can help increase market value when the time comes to put it up for sale. This increased practicality has been acknowledged by potential buyers as well, with 2020 Zillow housing trends noting that 67% of people admitted that energy efficiency was an “very to extremely important” consideration when looking for homes to purchase. Installing these renewable systems can quite literally pay for itself over time and furthermore add real monetary value for homeowners both now and in the future.
Factors that influence how solar panels influence your home value
Solar energy is becoming increasingly popular as an alternative energy source to power homes, businesses, and vehicles. Installing solar panels on your home can offer many benefits, such as an improved carbon footprint, cost savings from reduced energy consumption, and increased property value. However, not all solar installations result in a higher market value for the home. Several external factors can influence the value of your home when adding solar panels or other alternative energy sources.
Location
The geographic location of a home has been known to play a significant role in the market value of its property. This is especially true for homes that have already installed solar panels as the availability and cost of transitioning to such energy sources differs from one region to another. States such as California, Arizona, North Carolina, Massachusetts, and New Jersey, often referred to as top solar markets by the Solar Energy Industries Association (SEIA), are leading the way in optimism towards adopting solar energy. These locations often offer unique renewable energy laws and initiatives like tax credits which make it easier for homeowners to switch over to solar power with greater financial flexibility.
Electricity Rates
Solar panels convert the sun’s rays into electricity and this can then be used to power the home which can result in lower utility bills. Homeowners using solar panels will save a significant amount of money on electricity. Those living in high electricity rate states such as California, Colorado, Florida, New Jersey and New York will find the biggest savings when using solar. The amount of value the system adds to the home will be greater in these areas where there is a bigger increase in monthly savings.
The age of the solar panels, electricity system, and home
Solar systems may eventually reach their end of life, so homeowners should consider the age of the solar system when making the decision to invest. Solar systems usually last 25-35 years, while a well-maintained system could extend its use up to 40 years. In some cases, an older system might be more costly than just replacing it with a newer model. An inefficient system decreases energy efficiency and puts any expected savings on electric bills at risk. Moreover, if repairs or upgrades are needed, there might not be enough available coverage for equipment or guarantees for performance unless a warranty is in place.
In order to maximize your investment in solar energy it’s important to research the average lifespan of different types of systems and look into potential maintenance plans or warranties provided by manufacturers should something go wrong down the line. With proper care and regular checkups for any existing issues, an older model could last through the end of its warranty term, depending on the type of material and the manufacturer’s guidelines outlined in the product documentation. The advantages of potential cost savings from having solar energy can be rectified if you pay attention to what kind of product you are investing in and make sure that you are buying one with decent warranty coverage.
Conclusion
Installing solar panels is a win-win for your home, your wallet, and the environment. Depending on electricity rates, tax incentives, and the amount of sun your area receives, the impact on your home value will vary. Exploring all financing options, such as solar loans and home equity loans, and local tax benefits will help you decide if adding solar panels is the right project for you.
This article is published for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors when preparing your tax returns.
