Many housing developers and real estate agents will tell you that a home with solar panels has a higher cost. This value is added due to the solar panels saving money on electricity bills once installed, which offsets the investment made in them at the time of purchase.
A traditional residential solar energy system can generate power for upto 25 years or more. This can significantly impact your long-term savings. These savings affect your home value, but you might wonder, how does that happen? This article will explain all that and more.
Solar Panels And The Increase In Home Value
Solar panels come with several benefits which ultimately create a higher value for your home:
- Increased energy independence.
- Lower monthly energy bills.
- Decreased carbon footprint.
Factors Influencing Home Value
You can evaluate the increase in home value with these factors:
- Environmental values.
- Installation costs.
- Savings potential.
- Location.
Environmental Values:
Many homebuyers aim to have a home which doesn’t emit greenhouse gases. Solar energy can lower your carbon footprint, which ultimately helps in fighting climate change. Most people will even pay extra if they are saving the planet.
Installation Fees:
Most people want solar energy systems in their homes but don’t want to go through the hassle of installing them, which is why they buy houses already equipped with solar energy systems.
For a homeowner living in an area with consistent sunlight, rising home values, and high electricity costs, installing a solar panel array helps in saving a lot of money. It also adds value to their home for the time when they want to sell their home.
Savings Potential:
Solar energy is most commonly used to lower monthly energy bills. A higher savings potential equates to a better-valued home. Energy savings depend upon:
- You and your family’s energy consumption.
- Buying, leasing, or loaning solar panels.
- The electricity costs in your area.
You can also include metering programs and financial incentives to increase your savings. Some of them are:
- Solar Renewable Energy Credits (SRECs).
- Net metering.
- Federal Solar Tax Credit (Residential Clean Energy Credit).
Each program varies in its specificity. Ensure that you fully understand all the details to avail these programs.
Location:
Value is entirely dependent on the location of your home. An example is from the Zillow study. Homeowners in Riverside, CA, had an average price of $9,274, while those in Orlando, FL, saw a boost of $10,994. Los Angeles, CA and New York City, NY, experienced double the value increase at $23,295 and $23,989, respectively. San Francisco and CA had a value increase of $41,658, or a 5.4% premium over non-solar homes.
Considerations
There are several things to keep in mind when evaluating your total return on investment:
Quality of Installation:
Find a reputable and trusted solar company that has been in business for a long time. This will be a reliable investment rather than dealing with a solar company that goes out of business after a few years.
Research the solar company’s website, ask people who have used their services and contact them to know about them. A good solar installation company will provide you with experts offering free solar assessments and advice on everything regarding solar energy.
Installation Fees vs Time:
Before you invest in solar, ask yourself, “How long will I stay in this house?” The reduction in the electricity bills will be immediate, but it will take time to see the total return on your investment.
If you stay in a home for many years, you can invest in a solar panel system. However, if you’re selling your home, you should look into the estimated rise in sale price relative to your short-term energy savings and installation costs.
Energy Consumption Rate:
Each household has different energy needs compared to other houses. This can vary by days, weeks, months, or even years. Factors affecting the energy consumption rate are:
- Number of appliances used.
- House size.
- Number of rooms.
- Family size.
Giving the solar panel company your past electricity bills is a good idea if you’re installing solar panels. These bills help the solar company calculate how many solar panels you need.
Location:
Homes in sunny places will generate more power than homes in cloudy areas. Be mindful of peak sun hours and shade from hills, tall buildings, or trees. All of these decrease your solar energy output.
Local Incentives:
Check out all available incentives in your area to determine if your solar system will be supported or if it will save you money. This can be difficult, so talk to a tax expert or accountant about the potential benefits of solar tax credits.
Confirm rate options from your local utility company, and ask about the availability of net metering. Lastly, review the Database of State Incentives for Renewables and Efficiency to see if you could qualify for other incentives in your area.