If you own your home, you’ve probably heard that going solar can help you reduce your electric bill, delivering major savings over the 20+ years that your solar panels produce electricity. You may have also heard that installing a solar energy system on your roof can increase the value of your home – but by how much? It’s time to get past the sales pitch and understand exactly what solar companies mean when they say that your home value increases when you install solar.
The Lawrence Berkeley National Laboratory (LBNL), a Department of Energy-affiliated research lab, has studied solar home sales extensively. In 2015, researchers at LBNL compared sale prices of solar homes to homes without solar across eight different states to determine just how much value a solar energy system adds to a home. What they found: “Home buyers consistently have been willing to pay more for homes with host-owned solar photovoltaic (PV) energy systems —averaging about $4 per watt of PV installed—across various states, housing and PV markets, and home types.
For a 5-kilowatt (kW) solar energy system (the average system size in the U.S.), $4/Watt means an added value of $20,000. That extra value is a big part of the story, but remember – it doesn’t even include the month-to-month savings you’ll see on your electricity bill when you install solar on your roof. Considering that the average solar panel installation cost in the U.S. is about $3.70/Watt, it’s easy to see why going solar is a smart investment in your home.
There are many factors that influence how much you can save when you go solar, but the most important one isn’t how much sun you get – it’s the cost of electricity from your utility. As a result, the value that a solar energy system will add to your home is dependent on where you live.
Because solar reduces or eliminates your electric bill, your 20-year savings from installing a solar energy system will be greater in areas where electricity is more expensive. That means high electricity prices can result in greater solar home values, because potential home buyers are willing to pay more for a home with greater solar savings., That also means that newer solar panels will add more value to your home, because they will generate electricity for a greater lifespan.
LBNL’s 2015 study only analyzed homes with solar PV systems owned by the homeowner, which means that it doesn’t include homes where the property owner signed a lease or power purchase agreement (PPA). Solar lease corporations like SolarCity say that both owned and leased systems increase home values, but the additional value that third-party owned solar provides isn’t quite as clear. NPR and the Los Angeles Times have both written stories featuring homeowners who say that their solar lease made it more difficult to sell their home. So what’s the truth?
Unlike a system bought in cash or with a solar loan, selling a home with a third-party owned solar energy system means that you also have to transfer your lease or power purchase agreement to the new property owner. This can make the sales process more complicated, and some prospective buyers might not be excited about taking over a long-term lease or PPA.
The good news: a 2016 survey from LBNL found that, while a leased system can make your home sale more complex, “the overall impacts [of solar leases and PPAs] in terms of sales price, time on market, agreement transfers and customer satisfaction are largely neutral and in some cases a net positive.” So while leasing a solar panel system might not improve your home’s value, it probably won’t hurt it either – and you’ll have the benefit of a reduced electric bill for as long as you live there.
At the end of the day, the best way to be confident in your solar investment is to fully understand and compare your options. Use a solar calculator that gives you an instant estimate of how much you can save, and then use comparison-shopping marketplace like EnergySage to receive multiple offers from solar companies online.
With the EnergySage Solar Marketplace, you can compare equipment, financing, and solar company reviews to find the right combination of cost and quality for your needs. By comparing multiple offers, EnergySage customers can save as much as 20 percent on their solar panel systems.
Vikram Aggarwal is the founder and chief executive of EnergySage, the online solar marketplace. EnergySage simplifies the process of researching and shopping for solar. By offering shoppers more choices and unprecedented levels of transparency, EnergySage allows consumers to select the option that provides the best value for them, quickly and easily. Read all of Vikram's posts here.
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