Owned Solar Delivers a Significant Price Premium
Homeowners who invested in rooftop solar panels are seeing a substantial return at resale, according to a new study by SolarInsure that analyzed more than 5,000 home transactions. The research found that homes with owned solar panel systems sold for 5 to 10 percent more than comparable properties without solar installations, translating to a price premium of $39,500 to $79,000 depending on the home's value.
The study examined 2,350 home sales with owned rooftop solar systems, 1,790 sales with third-party solar leases or power purchase agreements, and 860 sales of homes without any solar installation. All properties were single-family residences in major California markets, providing a controlled comparison across similar housing stock and climate conditions.
"Buyers demonstrate demand for long-term energy savings and stability when purchasing homes with owned solar systems," said Ara Agopian of SolarInsure. The finding confirms what many in the solar industry have long argued: that solar panels are not just an energy-saving investment but a genuine home improvement that increases property value.
The Ownership Premium vs. the Lease Discount
The study's most striking finding may be the sharp divide between owned and leased solar systems. While homes with owned panels commanded significant premiums, properties with third-party-owned solar installations, either leases or power purchase agreements, did not show a consistent increase in resale value. In some cases, leased systems may even create complications during the sale process.
The divergence makes economic sense. When a homeowner owns their solar system outright, the buyer inherits a valuable asset that will produce free electricity for years or decades with minimal maintenance. When the system is leased, the buyer inherits an obligation: monthly lease payments and a contract with a third-party solar company that may run for 20 years or more. Some buyers view this as a liability rather than an asset, potentially complicating or even derailing transactions.
This finding has practical implications for homeowners considering solar installation. While leasing or entering a power purchase agreement reduces the upfront cost barrier, it appears to sacrifice the long-term property value benefit that makes solar a compelling investment. For homeowners who can afford the initial investment or who finance the purchase through a solar loan, outright ownership delivers superior returns both through energy savings and home value appreciation.
The Return on Investment Math
The study provides useful context for evaluating solar as a financial investment. A typical residential solar installation in the United States is approximately 7.4 kilowatts, which costs roughly $22,000 at the current average price of about $3 per watt before tax credits. The federal solar investment tax credit currently covers 30 percent of installation costs, reducing the effective price to around $15,400 for most homeowners.
Against that investment, a home value increase of $39,500 to $79,000 represents a return of roughly 2.5 to 5 times the net cost of installation, before accounting for any energy savings generated by the system during the years the homeowner lives in the property. When those ongoing savings are factored in, the total return becomes even more compelling.
The SolarInsure analysis updates a widely cited 2019 study by Zillow, which found that solar panels added approximately 4.1 percent to home resale values. The new study's higher premium range of 5 to 10 percent suggests that the market's valuation of solar installations has increased over the past seven years, likely driven by rising electricity costs, growing environmental awareness, and the increased reliability and longevity of modern solar technology.
Why the Market Values Solar
Several factors drive the resale premium for solar-equipped homes. The most obvious is the economic benefit: buyers know that a home with solar panels will have significantly lower electricity costs, sometimes eliminating the electric bill entirely. In markets with time-of-use pricing or net metering, solar can generate credits during peak production hours that offset consumption during evenings and cloudy days.
Energy independence is another factor. In an era of grid instability, wildfire-related power shutoffs, and volatile energy prices, buyers increasingly view solar panels, especially when paired with battery storage, as a form of resilience. A home that can generate its own electricity is less vulnerable to utility rate increases and supply disruptions.
There is also a signaling effect. Solar panels are a visible indicator that a home has been well-maintained and upgraded by an owner who invested in its long-term value. Buyers may associate solar installation with other desirable home characteristics, such as modern electrical panels, energy-efficient appliances, and good insulation.
Implications for the Solar Industry
The study's findings provide powerful ammunition for the residential solar industry, which has faced headwinds in recent years from utility rate changes, permitting delays, and the expiration of some state-level incentives. By quantifying the resale value benefit, the research gives solar installers and advocates a concrete financial argument to supplement the environmental and energy-cost cases for adoption.
For real estate agents and appraisers, the data supports more accurate valuation of solar-equipped properties. Historically, solar installations have been inconsistently valued in real estate transactions, with some appraisers treating them as having no impact on home value. Studies like this one provide the empirical foundation for more standardized valuation practices.
The clear message for homeowners is straightforward: if you are considering solar, buy rather than lease. The upfront investment pays for itself through both energy savings and property value appreciation, while leased systems may leave money on the table when it comes time to sell.
This article is based on reporting by Electrek. Read the original article.
