© Provided by CNET The number of premium solar panels you can install in your home depends on where you live. Crongkeow/Getty ImagesMany homeowners are aware of the benefits of solar panels - they lower your energy bills, reduce your carbon footprint, and even get significant tax breaks.
But did you know that switching to solar energy can also increase the value of your home?
A 2019 Zillow report found that homes with solar panels on the roof sold 4.1% more than comparable homes without them. For an average home, that's about $9,300.
Solar-powered homes are likely to sell for 24.7% over their asking price, according to Rocket Homes.
Tony Accardo, Los Angeles County real estate agent at Compass, says solar power is "a key selling point" in his discussions with potential buyers.
"If there are two identical houses, but one of them doesn't have solar power and costs $50,000 less, the one with solar power will sell first," Accardo told CNET.
Here's what you need to know about how and why solar panels can add value to your home.
Best Solar Companies: See CnetHow much value will solar panels add to my home?
There are tax incentives for purchasing and installing a rooftop solar system, most notably the Federal Solar Tax Credit.
When selling, the cost of a rooftop solar system depends on many factors, including where you live, electricity costs, and the type of system you have.
What most attracts homebuyers is how much energy your home requires to run electrical appliances. If he can provide all of this, his energy bill could be reduced by an average of $1,500 per year, which equates to about $37,500 over the life of the system.
Read more: How long does it take for solar panels to pay for themselves?
"If solar panels aren't on buyers' order lists, they plan to install them themselves," Accardo said. "They want to recoup their electricity costs and improve their resale position themselves."
He added that solar energy "gets" more than having a swimming pool.
"The big couple who's been looking at your house probably won't mind if you have a pool. Or even consider it an affliction,” Accardo said. "This is a direct savings that anyone can take advantage of."
Where you live matters
The cost of solar systems varies greatly depending on the market. No wonder buyers in states with high energy bills are turning to solar panels.
According to the Energy Information Administration, as of January 2023, residential energy bills were highest in California, Illinois, Michigan, New York, New Jersey, Pennsylvania, Wisconsin and all of New England.
With over 10.7 million homes that rely primarily on solar power, California hosts the vast majority of the residential solar power markets.
Here are the top 10 solar power falls, based on data from the Solar Industry Association on total installed solar capacity through 2022 and number of solar homes.
Many of these states offer loans to homeowners who will feed excess energy back into the grid. At least 36 states offer property taxes for residential solar installations. So while it increases the value of your home, it doesn't increase your tax bill.
A 2015 analysis by the Department of Energy's Lawrence Berkeley National Laboratory found that buyers in California, Connecticut, Massachusetts, Minnesota, North Carolina and New Jersey paid an additional $15,000 for a home with a typical 3.6-kilowatt photovoltaic array . (Equivalent to about another $4 per watt produced.)
Individual metropolitan areas have also risen to the top when it comes to solar use, with Los Angeles, San Diego, Honolulu, Phoenix, San Jose, San Antonio and New York being the most in demand, according to the survey last year. California Center for Environmental Research and Policy.
In New York City, the availability of solar panels led to a 5.4% increase in home prices, compared to a 4.1% increase nationwide, according to Zillow. It costs about $24,000 more for a mid-priced home in the Big Apple.
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Electricity prices will remain high
Headline inflation eased to 5% in March and could fall to 3% by the end of the year. But Mark Wolf, director of the National Association of Energy Assistance Administrators, told USA Today that electricity prices could rise by 10% in 2023 and possibly 2024.
That's because liquefied natural gas, which supplies more than a third of Americans' electricity, is running out as the United States exports record volumes to Europe, which has been struggling to recoup losses from Russia since invading Ukraine in 2022 . .
"For the first time in history, unprecedented exports have turned US household utility bills into a global catastrophe," Wolff wrote in an open letter to Energy Secretary Jennifer Granholm last fall.
He called the situation "an internal crisis in energy prices".
Read more: How homeowners can save money with solar panels
When asked about the reasons for installing solar panels, nearly all (92%) of homeowners who have installed or are considering installing solar panels report savings on utility bills, according to the Pew Research Center.
"People are not altruistic," Accardo said. "They are interested in solar energy because of the savings, not because of the environment."
Does solar power always add value to my property?
According to Accardo, a well-designed rooftop solar system is unlikely to reduce the value of your property. Even if you don't have solar panels, buyers can pay more for a home with a fully functional roof that can be installed later.
However, changes in state regulation could make selling solar energy less profitable: California recently switched from a net-metering system, where homeowners are credited for nearly a dollar of excess electricity, to a net-billing program, where you the surplus sold will be billed again to utilities at a much lower price.
Systems installed after April 14, 2023 can charge homeowners 75% less if they also don't have a home battery, according to the California Solar Energy and Storage Association, the state's largest trade organization for solar panels. (Existing systems fit into the existing net accounting structure.)
Environment America, a nonprofit, said similar policy changes have resulted in reductions in solar energy use in Hawaii, Nevada and Missouri.
In Arizona, new fees and regulations have nearly doubled the time it takes to pay for solar panels, causing adoption to drop from 50% to 95%, according to EA. (Even though it's the sunniest state in the Union, fewer than 200,000 homes in Arizona have solar panels.)
The condition of your panels and your house also plays a role. If the buyer sees that they need to invest in repairs, this will likely result in a price drop.
And as more states transition to clean billing, solar panels, along with a home battery backup system, are becoming increasingly important to getting the most out of your home.
For more information on solar energy, learn how to avoid scams and learn about the big changes in California solar subsidies.
