It’s always good to feel like you’re getting your money’s worth. Solar may be expensive (the average installation runs at about $12,000 after incentives), but it comes with some surprising benefits that make it worth the high price tag in many homeowners’ minds. And we’re not just talking about the way it helps the environment. Solar can help your household financials, too, by increasing your home’s value and adding to its appeal when you resell. Here are all the unexpected ways a solar installation earns its keep and gives back to your home on your valuation.
Solar Literally Increases Your Home’s Value
Solar directly adds to your home’s value by increasing its worth on the market. In multiple studies, solar panels were shown to add a premium to home sale prices. One of the largest of the studies was conducted by U.S. Department of Energy’s Lawrence Berkeley Laboratory in 2015, which assessed around 22,000 recent home sales, including about 4,000 solar homes. The researchers found that the solar homes sold for a higher price—about $4 for every watt of installed solar power. On average, that equals around $15,000 for homes with solar panels—no small potatoes!
The amount depends on your market, of course. Another study run by The National Bureau of Economic Research looked at solar homes sold in the San Diego and Sacramento areas in California and noticed a $22,554 increase, on average, to those homes. California has the most residential solar installations in the country, owing to its generous incentive programs, as well as higher average sale prices for homes, so it makes sense that the overall value would be worth more here. The study concluded that certain factors, like the share of residents that drove a Prius, or the number of college graduates in an area, also influenced the total premium from solar panels. So depending upon the demographics of your area, you could see an even larger return when you resell.
However, it’s important to note that those premiums are less clear cut when it comes to leased panels. The details of who will take over leasing agreements, and how contracts will be renegotiated, can certainly be a turnoff for buyers, who could find the whole process burdensome. Although this has yet to be officially studied, realtors have over and over again noted this common trend in regards to leased panels. So to save yourself hassle, don’t rent your solar panels if you’re planning on selling somewhere down the line.
Solar Helps Your Home Sell Faster on the Market
Another advantage of selling a solar homes? Homes with PV tend to spend less time on the market. Researchers have long noted that energy-efficient homes tend to sell faster than conventional properties, especially when they bear official green certifications like Energy Star or LEED. According to the Department of Energy, PV homes share the energy-efficient sales boost, as well. Since home shoppers tend to view solar panels as a home upgrade, similar to a high-end kitchen or a finished basement, homes with solar installed spend less time waiting for buyers to bite.
Over and over again, researchers have showed that energy-efficient homes sell faster than conventional homes—as much as 89 days faster, in one study. The real estate listing site Zillow has found that homeowners still prioritize other features, such as a home’s location or its floor plan, above its energy-efficiency when deciding to buy. However, solar panels can make the difference between two otherwise similar homes. Consumers are learning more about solar power as energy grows more and more distributed. The first part of 2017 marked the fourth quarter in a row where the solar industry grew by over one gigawatt capacity, so there should be a lot more acceptance, and even more value, as solar becomes more mainstream.
Solar Lowers Your Utility Bills
This is the most obvious way solar benefits homeowners. Depending upon your utility usage and the size of your solar energy system, solar can reduce or even completely erase your electricity costs. It’s difficult to average these savings, since there are so many factors that influence your final totals. This includes—but isn’t limited to—your area’s utility rates, your home’s orientation and the slant of your roof, and the amount and intensity of the sun in your area. But anecdotally, most installers say solar will generally offset around 15 to 40 percent of your utility costs.
Solar doesn’t just save you, though. It also helps everyone in the area. In fact, a large study conducted by Boston University showed that solar not only reduces costs significantly for solar households. It also has a ripple effect that lowers prices across the region. Homeowners funneling excess solar energy back into the grid save utilities on operating costs, since it’s much easier to move electricity around than it is to generate it. In studies, the National Renewable Energy Laboratory indicated that incorporating more renewable energy could save plants in the western states a potential $7 billion a year, which is about $83 a person. So you’ll actually be doing your neighbors a favor by opting to install!
Solar Qualifies You for Tax Incentives and Credits
Many homeowners don’t realize just how many programs are out there to make solar a more affordable alternative to conventional electricity. Almost every US homeowner who installs solar qualifies for the Residential Renewable Energy Tax Credit, which returns a generous 30 percent of your system and installation costs as a tax credit when you file with the IRS.
Additionally, in many areas, hooking solar up to the grid also qualifies you to participate in utility net metering programs, which add credits to your account for every kilowatt of excess energy you return to the grid. In some places, these credits can be rolled over and applied to your next bill, cashed out, or even resold on the market to other buyers. Utilities and local governments may also have flat-rate programs in place that pay out a credit when you choose to install. In some regions, purchasing solar exempts you from sales taxes on the system or excess property taxes levied on your home from the installation. On the other hand, some regional governments offer lending programs. Finally, there’s also the option of commercial power purchasing agreements available that ease the burden of a hefty down payment.
Manufacturing costs have solar panel prices plunging to never-before-seen lows. But at the same time, the future of many incentives like tax credits is precarious, which means you’ll benefit the most if you don’t wait around to install. Solar has lots of value to add to your home, but you won’t be able to take advantage of those savings forever. So if you’re serious about saving money in your home, you’ll need to act fast—otherwise, you may miss the sweet spot for solar savings!
Erin Vaughan is a blogger, gardener and aspiring homeowner. She currently resides in Austin, TX where she writes full time for Modernize, with the goal of empowering homeowners with the expert guidance and educational tools they need to take on big home projects with confidence.