With the growing awareness about sustainability, governments all over the world have started promoting the use of solar energy in residential properties as well as commercial ones. Since a major part of the world still relies on non-renewable energy sources to power their homes, public spaces, and workplaces, switching to a greener energy source, such as solar energy, can help reduce the global carbon footprint.
If you are planning to install solar panels on your roof and produce green energy for your home, it can be a great investment. After the initial investment, you can expect a stable flow of electricity and lower energy bills. What people often do not realize is that installing solar panels can actually increase the potential value of your property in the market. Let’s explore the ways solar energy production can increase your property value.
Factors That Influence the Rise in Property Value Due to Solar Panels
Several studies over the years have shown that homeowners and buyers view solar panels as upgrades, similar to a renovated kitchen or a finished basement. Moreover, there is evidence that homes with solar energy systems sell faster than those without. Here are the factors that influence the value appreciation of a property after installing solar-energy systems.
Energy Savings
Solar energy systems can help you save long-term on power bills for 25 years or more. The panels that are typically installed on the roof gather energy from the sun and, in turn, reduce reliance on conventional grid power. Apart from helping you save money on electricity bills, it also attracts potential buyers to your property.
Tax Credit
When you invest in solar energy systems, you may qualify for an annual residential clean energy tax credit. This credit equals 30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032. This credit is nonrefundable, so the credit amount you receive cannot exceed the amount you owe in tax. However, you can carry forward any excess unused credit and apply it to reduce the tax you owe in future years. According to the Internal Revenue Service, homeowners can claim this federal tax credit for qualifying solar panel installations, making the investment even more attractive. This type of tax credit certainly makes a difference in a property’s valuation.
Sustainability
There are many buyers in the market who are looking for sustainable and eco-friendly options. Solar panels contribute to a smaller carbon footprint, which can be a major selling point for property owners. By installing solar panels, you can position your property as an eco-friendly investment and practical solution for the future of home energy. Also, solar energy systems can integrate seamlessly with electrification upgrades, storage batteries, EV chargers, and smart home energy controls.
Energy Independence
With solar panels installed on your property, your home can generate sustainable electricity on-site. This is a great alternative to grid-supplied power.
Solar energy systems with battery storage facilitate the most effective energy independence, with the ability to produce and use solar electricity “off-grid” and during local power outages.
Type, Age, and Warranty of Solar Panels
The technical specifications and quality of the panels are crucial factors affecting the home’s value. There are numerous manufacturers in the market, offering a variety of solar panels, inverters, batteries, and other equipment with varying features, lifespans, and warranties. Do your research and invest in the best solar panels so that you can get better returns when you resell your home.
Size of the Installation
The value of your home can increase based on the size and the number of solar panels you are installing. For the best value, your solar panels should be capable of producing enough energy proportional to the size of your house. If the panels are insufficient to serve the home’s energy requirements, they may not add much value to your property.
How Much Can Solar Panels Increase Your Property Value?
Studies conducted by various real estate organizations have shown that solar installations can increase property values by approximately 4% on average. The exact increase depends on several factors, including your location, local electricity rates, and the size of your installation. Properties with solar panels typically sell 20% faster than comparable homes without solar systems, making them highly attractive to today’s environmentally conscious buyers.
Conclusion
There is no denying that investing in solar energy can significantly increase the value of a property, especially during a time when people are looking for sustainable ways to live. Apart from additional savings on energy bills, factors like tax credits, sustainability, energy independence, and the quality and size of panels can influence the property value. As more buyers prioritize energy efficiency and environmental responsibility, solar-equipped homes continue to command premium prices in the real estate market.
