Making the Connection Between Solar Power and the Value of Your Home

How Much Does Solar Impact a Home’s Value?

Like any home improvement project, adding solar power to your home is an investment. But one way that solar power differs from most home improvement projects is the fact that it not only increases your home’s value, but it also helps you save money in the form of lower utility bills.

In fact, so much attention gets paid to solar’s ability to reduce energy bills that increasing a home’s market value is arguably one of the most undersold reasons for going solar. So, how much can you expect your home’s value to rise after having solar panels installed? The connection between solar power and the value of your home depends on six key factors, which we will go over here.

Local Electrical Costs

Different states, cities, and even communities can experience different electrical costs. The homes that will see the highest spike in market value tend to be those located in areas with higher electrical costs because this results in greater value from your solar panels.

Solar Installation Prices

Along with electrical costs, another factor that is determined by geographic location is the cost of solar installations in your area. In almost every area, home buyers who want solar are more likely to purchase homes with systems already in place instead of having their solar installed after buying, if for any other reason than they would have to be responsible for the cost of installation.

So, if your home already has solar installed when it comes time to sell, then your home will be that much more valuable to buyers.

Sun Exposure

Not every property receives an abundance of sun exposure. Sine solar panel efficiency is greatly impacted by the amount of sun a home is exposed to, homes that receive a lot of sun are more desirable to those looking to take advantage of solar’s benefits. Therefore, homes that receive plenty of sun exposure tend to enjoy higher increases in value than those that don’t.

Solar System Output

Solar system output is not only affected by sun exposure, but it is also determined by the size of the system. According to The Appraisal Journal, home value increases about $20 for every dollar saved on annual energy costs. So, if you have a solar system that can provide $200 monthly savings, then you can reasonably expect the value of your home to be $48,000 higher than it was before your solar system was installed ($200 x 12 months x 20 = $48,000).

Solar System Age

Like everything, a solar system’s value will depreciate over time. So, it is important to remember that the age of your system will definitely impact your home’s market value. The reason is because when someone buys a home with an older solar system, they will have a higher chance of having to pay for repairs or replacements, so they won’t want to pay top dollar for the home knowing that expense will be soon in their future.

System Replacement Value

Much like the solar system’s age, its replacement value will also impact your home’s value. The truth is not all solar systems are the same. Some are installed with more expensive or harder to find parts. If this is the case with your system, then your system’s repair and replacement costs can be substantially higher than other homes with solar in your area.

What About Property Taxes?

When your home value goes up, so does your property taxes. But in the case of solar power, many states offer property tax exemptions, so even though your solar system will increase your home’s value, your property taxes stay the same.

Currently, the only states that do not offer property tax exemptions of any kind for solar are Alabama, Arkansas, Delaware, Georgia, Idaho, Kentucky, Maine, Mississippi, Nevada, Oklahoma, Pennsylvania, South Carolina, Utah, Washington, West Virginia, and Wyoming.

Leave a Reply

Your email address will not be published. Required fields are marked *