Will Solar Panels Impact My Property Value?

If you might sell your home in the next decade, it’s fair to wonder whether solar panels will help or hurt the sale. The research points in a fairly consistent direction, with one big exception: who owns the panels.

What the research says

Lawrence Berkeley National Laboratory, 2015

The largest US study of solar home sales, “Selling Into the Sun,” looked at nearly 23,000 home sales in eight states between 2002 and 2013, about 4,000 of them with solar. Buyers paid a premium of roughly $4 per watt of installed solar, or about $15,000 for an average 3.6 kW system at the time.

Zillow, 2019

Zillow found that homes with solar panels sold for 4.1% more on average than comparable homes without them, based on sales from March 2018 to February 2019. The premium varied a lot by market.

Newer research

A 2024 study by economists Gillingham and Watten in the journal Regional Science and Urban Economics found that owned solar systems are roughly priced into home values, meaning buyers pay about what the future electricity savings are worth. The authors also note that some earlier studies may have overstated the premium, because homes with solar often have other upgrades too.

Owned versus leased panels

This is where the answer changes. A 2017 Berkeley Lab study of about 20,000 California home sales found a premium for homes with owned solar systems, but no premium for homes with leased systems or power purchase agreements. The 2024 study reached a similar conclusion.

A lease can also complicate the sale itself. The buyer has to qualify for and agree to take over the contract, or you may need to buy out the lease before closing. If you’re considering a lease and might sell within a few years, read the transfer terms carefully. Our article on “free” solar offers covers what these contracts usually say.

Why solar can add value

Buyers value lower electric bills. A long-standing rule of thumb from appraisal research, published by Nevin and Watson in The Appraisal Journal in 1998, is that each $1 cut from a home’s yearly energy bills adds roughly $20 to its market value. That study looked at energy efficiency in general, not solar specifically, but the logic is the same. The higher your local electricity prices, the more buyers tend to value solar.

When solar adds less, or causes problems

• The system is old. A 15-year-old system with a worn-out inverter is worth less to a buyer than a newer one with years of warranty left.
• It was installed poorly. Roof leaks, messy wiring or panels that don’t match the permit can come up during inspection.
• The roof needs replacing soon. Buyers may subtract the cost of removing and reinstalling the panels.
• Electricity is cheap where you live. The savings, and so the premium, will be smaller.
• The appraiser doesn’t account for it. Some appraisers have little experience valuing solar, so it helps to have documentation ready.

How to get credit for your system when you sell

• Keep your contract, permits, final inspection and utility permission-to-operate letter.
• Collect 12 months of production data and electric bills from before and after solar.
• Know which warranties transfer to a new owner and how long they have left.
• Give this information to your agent and appraiser early.

If you’re weighing the numbers, our articles on solar payback and how much solar saves can help.

Sources

• Lawrence Berkeley National Laboratory: Selling Into the Sun
• Zillow: Homes with solar panels sell for 4.1% more
• Gillingham and Watten: How is rooftop solar capitalized in home prices? (2024)
• Lawrence Berkeley National Laboratory: Solar homes and leased systems in California (2017)
• Nevin and Watson: Evidence of rational market valuations for home energy efficiency (1998)