I bet you’re wondering if installing solar panels adds value to your home, or in other words, does it make your house more attractive.

Homeowners are constantly looking for ways to increase the value of their homes. Whether it be adding a new deck or converting your yard into an edible garden, there is always something that can be done to boost home equity.

But what about investing in a solar energy system, so you can power your home’s electricity from the sun?

Solar can add value to your home and make it more attractive to potential buyers. The premium you can expect varies across different states, partly depending on how sunny it is and the cost of electricity from the grid. A real estate expert can help you understand what to expect in your area.

As the costs of installing solar energy continue to drop and equipment becomes more efficient and sustainable, an increasing number of homeowners are taking the plunge and going solar.

In this article, we do a deep dive into all the studies we could find on whether or not solar really adds value to your home.

There’s a lot to take it, so grab a cup of coffee and take your time going through the rest of this article.

Solar Popularity & Market Growth

According to the Solar Energy Industries Association (SEIA), in 2020, solar claimed the lion’s share (43%) of all new electricity-generating capacity in the U.S. for the second year in a row. Wind was a close second with 38%, and natural gas, the leader in 2018 with 57%, was down to just 18%. But predictions are that solar is still on the rise.

The SEIA Solar Market Insight Report for 2020, released in March 2021, states that residential solar will likely reach double-digit growth in each of the next three years. Compiled by the leading research and consultancy firm for global energy, Wood Mackenzie, the report predicts that the percentage of homes with solar installations will grow from 4% in 2020 to 13.4% by 2030.

This, in itself, indicates the growing value of solar energy and shows how an increasing number of homeowners are embracing its benefits.

So now, let’s delve a little deeper to see how solar can add value to our homes.

Potential for Solar Energy to Add Value to Your Home

A thumbnail from a video about whether solar really adds value to your home. The image shows a graph with added values for different states.
As a general rule, solar panels will increase the value of your home. However, in certain areas, there might be little or no premium. Make sure you speak to a real estate expert to get an accurate picture for your area.

The potential for any solar panel home value increase is dependent on various factors, including climate and the system itself. While no doubt installing solar panels can increase the value of your home, you must own the system. We don’t advise leasing for many reasons and we covered this in another article here.

A picture of our roof during the solar energy installation. It shows many roof penetrations from the solar racking mounting system hardware going into the roof over the shingles
A picture of all the roof penetrations from the mounting hardware on our net-zero home renovation project. It makes me nervous to think about leasing something that puts all these holes in my roof!

EnergySage, an online marketplace developed with funding from the U.S. Department of Energy’s (DOE) Sun-Shot program, agrees. They point out that if you lease or enter a power purchase agreement (PPA), you rent the system from a third-party owner.

If you lease a system, it can’t be included in your home value appraisal until (if ever) you take ownership of the system. For a buyer, this will usually mean taking over the lease or buying it out. If the investment is part of your property asset, it can be financed by the buyer’s mortgage and will immediately add value.

For me, the vital factor is whether your return on investment (ROI), in terms of costs vs energy generation, will be worth it in the long run.

When people ask, do solar panels increase home value, I’m the first to point out that not every home has the best potential for solar energy systems. I discuss some of the limitations of solar energy here, including poor energy reliability in areas with limited sunshine.

Down here in Florida, we’ve got lots of sunshine, and we’re reaping the benefits of our newly renovated net-zero solar home. Renewable solar energy powers the whole house, and it could power yours too if your location has enough sunny days and the system is well designed.

This doesn’t mean that you can’t generate solar energy in colder or cloudy climates. You can, but when a house can’t run on solar energy alone, there will be certain constraints. This will inevitably limit the solar panel home value increase (or value) based on its cost and overall production ability.

So, it’s a viable idea wherever you live, but just how will solar add value to your home?

Value in Solar Energy Is Not Just Money

While solar energy can save a lot of money, added value doesn’t only apply to dollars.

These are the most commonly acknowledged benefits of installing solar energy in our homes. All add value in one way or another.

  • Solar power reduces current utility bills and saves money
  • Solar improves comfort levels in the home for example by making heated floors accessible
  • Solar is seen as an investment for future energy savings
  • Solar is identified by many buyers as an upgrade
  • It enables a greener lifestyle, which many people recognize as increased home value
  • Some people consider solar panels to improve social status
  • Solar increases the financial value of our home, increasing both the potential resale and rental values
  • Installation of solar PV systems improves energy efficiency
  • Solar systems help to reduce greenhouse gas emissions and ensure cleaner air
  • Solar panels may provide power to the grid during peak demand hours, lightening the load on power plants

But the million-dollar question is, how much value will solar add to your home?

What The Department of Energy Says About Solar Adding Home Value

A picture of three houses with solar on them reading Benefits of Residential Solar Electricity, which links through to the DOE Renewable Energy Resources page.

Energy Saver, the DOE’s renewable energy resource that helps consumers save energy at home, recognizes that solar panels are seen as upgrades. But while they are likely to increase the value of your home, when it comes to financial savings, many factors will impact value.

Their assessment is that it will depend on:

  • Your electricity consumption
  • The size of your solar energy system
  • Whether you buy or lease the system
  • How many direct hours of sunlight your house gets
  • The angle and size of the roof
  • Local electricity rates

Solar Panel Home Value – What the Research Shows

There is considerable evidence of solar panel home value increase figures. This is backed up by ongoing research data collected globally for more than a decade. The data also indicates that specific U.S. states have higher solar premiums than others, which impacts directly on just how much solar adds value to your home.

The 20:1 Rule For Solar Home Value –  A Brief History

For many years, people used the 20:1 rule of thumb to justify investing in solar. The 20:1 rule in solar means:

Your solar system is worth 20 times more than the energy savings realized in the first year.

Housing Market Capitalization of Energy-Saving Durable Good Investments

Going back to 1983, Ruth Johnson and David Kaserman published a study entitled Housing Market Capitalization of Energy-Saving Durable Good Investments, pioneering this assumption. You can read the full release here, though it looks like you’ll have to pay for the entire PDF.

Later on, in 1998, another comprehensive study was published by Rick Nevin and Gregory Watson entitled: Evidence of Rational Market Valuations for Home Energy Efficiency, which we’ve uploaded here if you’d like to read it.

A picture of the original article front page of Evidence of Rational Market Valuations for Home Energy Efficiency by Nevin & Watson.

These sources of the ratio hypothesis were amongst the first studies that looked at the value energy-efficient equipment adds to our homes, and has stuck ever since.

Since then, researchers have been delving deep to find out just how much solar value can add in terms of dollars. Some are from educational organizations, some from firms that offer resources to help consumers choose the best equipment, and others are attached to companies that manufacture solar equipment.

Let’s look at some of the figures that are backed by reputable research.

Economic Research Shows Solar Panels Increase Home Values

In 2011, the National Bureau of Economic Research (NBER) released a report that stated solar panels added 3-4% to the value of U.S. homes. This figure is consistent with the findings of the first Berkeley Lab study quoted below. Both studies focused on California.

The paper, Understanding the Solar Home Price Premium: Electricity Generation and “Green” Social Status, published in July 2011, used a large sample of homes in Sacramento and the Sandiego areas of California to estimate the sales values of homes with solar panels used for electricity generation (not hot water) versus those without.

They found that houses with solar panels sold for a premium of about 3.5%.

They also found that solar installation was regarded in the same way as other home improvement investments including a new kitchen. Solar installation, they concluded, bundled both consumption and investment value.

An added value was that many homeowners with solar took pride in producing “green” electricity. The premium relating to solar homes was also more significant in communities where more registered Prius hybrid vehicles and a bigger percentage of college graduates.

In San Diego, the price premium of solar was around $22,554, which, if federal and state subsidies were included, was equivalent to the cost of installation. So, homeowners would be likely to recover the installation costs on the sale of their properties.

Berkeley Lab Research Shows Solar Adds Value

Lawrence Berkeley National Laboratory (Berkeley Lab), which researches within the U.S. electricity sector, has found multiple times that solar can add substantial value to homes. The two Berkeley Lab reports that have attracted the most attention are Selling Into The Sun and Appraising Into The Sun. But there have been many more.

Solar Panel Home Value Increase in California

An early 2011 study, an Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California, provided strong evidence that homes with solar PV systems sell for more than homes without solar.

Researchers had set out to see if certain incentive claims could be substantiated. For instance, at least some of the initial investment into solar PV systems would be recouped if the house was sold. Their positive findings were based on a dataset of 72,000 homes, about 2,000 of which had PV systems.

They found that the sales premium buyers were willing to pay $17,000 more if the house had a relatively new 3,100 watt PV system. This equated to about $3.90-$6.40/watt. At the time, it was comparable to the average investment homeowners would have had to make between 2001 and 2009.

They noted that house values decreased as PV systems got older. 

Selling Into The Sun

Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes, published in 2015, reported that by the second quarter of 2014, there were already more than half a million U.S. homes installed with solar PV. In a later update, they said that just two years later, in the second quarter of 2016, this figure had increased to more than 1.1 million.

The study itself took place from 2002 to 2013 and analyzed 22,822 home sales spanning eight states. Of these, 3,951 had PV systems.

Their overall finding was that home buyers are consistently willing to pay more for PV solar regardless of home type or state. The average increase in premiums (value) was $15,000 (or $4/watt) for a house with an average-sized 3.6-kW PV system.

A picture of the front page of the presentation of Selling Into The Sun Price Premium Analysis of a Multi-State Dataset of Solar Homes by Ben Hoen.

This is less than the sales price premium they identified in California in 2011 but was expected given the demographics of the Californian market.

They also found that premiums decreased dramatically – by almost 60% – after PV systems were 10 years old.

Appraising Into The Sun

Appraising Into The Sun: Six-State Solar Home Paired-Sales Analysis, also published in 2015, threw a curve ball, showing that some U.S. homes with PV systems haven’t increased in value. This wasn’t because the value wasn’t there, but rather that relevant home sales comparisons weren’t available to verify value.

So, the study posed the burning question: How much value do PV systems add to homes?

The study was limited to California, Oregon, North Carolina, Maryland, Pennsylvania, and my home state, Florida. Seven appraisers teamed up with Berkeley Lab researchers and analyzed the available data.

Only homes with crystalline-silicon panels were included in the study. All the PV systems were less than 12 years old, and leased or third-party owned were not included.

They paired sales with similar homes in the same area, taking multiple factors into account. This included the use of income- and cost-based PV premium estimates. Most importantly, one house in each pair had solar PV installed, and the other didn’t.

Average premiums varied in the different states and even in different parts of each state. The highest individual premiums were:

  • $52,500 in San Diego California
  • $38,100 in Holly Springs, North Carolina
  • $36,050 in Bend, Oregon
  • $30,850 in San Diego California

The highest premiums in the other three states were:

  • $23,800 in Timonium, Maryland
  • $18,000 in Flourtown, Pennsylvania
  • $17,941 in Davenport, Florida

Ultimately, they found that as long as PV systems are no more than 12 years old, homes in these states will sell for a premium.

Solar Panels Increase Home Value by 4.1%

The popular online real estate marketplace company, Zillow, also undertakes economic research. In a recent study, they calculated solar premiums for homes listed and sold between March 1, 2018, and February 28, 2019, by comparing prices reached for homes with and without solar energy systems.

Interestingly, even though California is generally considered the state leading the solar revolution in the U.S. (see below), the Zillow research found that New York City reached a solar premium of 5.4%. This was not only 1.3% higher than the U.S. average of 4.1%, but higher than the three Californian metro areas included in the study.

Credit to Zillow Research and Tableau.

The research shows that San Francisco has a sales price premium of 4.4%, Los Angeles 3.6%, and Riverside 2.7%. Orlando, Florida boasts a premium of 4.6%.

For the average home, 4.1% translates to a sale premium of $9,274. In New York, the extra value amounts to $23,989. These are less than the premiums reported in Appraising Into The Sun, but substantial nonetheless.

U.S. States Leading the Solar Revolution

There is no doubt that California, with its ideal climate, is the leading U.S. state in solar. But the bigger picture is more than encouraging.

By 2016, more than 1.1 million U.S. homes had installed solar PV systems. By 2019 there were more than 2 million solar PV installations, with Wood Mackenzie and the SEIA predicting there would be 3 million installations by the end of 2021, and 4 million in 2023.

National Renewable Energy Laboratory Study

If you’ve ever west along I-25 in Colorado heading up the mountains, you may have seen this pretty cool and very impressive campus filled with modern buildings and solar panels covering all of them. This is NREL, the National Renewable Energy Laboratory. It employs near 3,000 researchers, engineers, and other professionals to help bring the latest tech in sustainability and renewable energy forward.

NREL released a massive 413-page study in 2006 that studied the San Diego housing market as it relates to homes with solar on them. What they found was that homes sold 20% faster and were valued at over 15% more than non-solar homes.

We have to note this is also in California, where some of the highest electricity rates in the country exist.

an overhead photo taken of the NREL campus with solar panels on all the buildings, and with the Colorado Rocky Mountains in the background

Impact of Solar on Real Estate

According to the U.S. Office of Energy Efficiency & Renewable Energy, the real estate market embraces all things solar. Just as kitchen and bathroom renovations increase the value of homes, solar boosts home valuations. The installation of solar energy systems also shortens the length of time it takes to sell a home.

This is, of course, consistent with the findings of the NBER paper, “Understanding the Solar Home Price Premium,” I mentioned earlier. But there is a lack of understanding throughout the realty sector in terms of quantifying value.

In an article by the Office of Energy Efficiency’s Solar Energy Technologies Office (SETO), SETO Spotlight: Solar and Real Estate, they say it’s vital for real estate agents, homeowners, and appraisers to increase their solar knowledge. This will help them leverage the “premium-boosting power” of solar systems when selling or refinancing homes.

With this in mind, they have established SunShot Programs to educate real estate agents, appraisers, code officials, financiers, and other professionals in the industry about solar energy. to enable them to:

  1. Provide customers with knowledgeable service relating to solar.
  2. Provide an accurate account of the value of solar when homes are sold.

Berkeley Lab, which has confirmed the value solar adds to homes over and over again, draws attention to the fact that while early studies show PV systems add value to homes, few of these were undertaken by real estate appraisers using accepted appraisal methods.

In Appraising Into The Sun, they made various recommendations to improve solar valuations. This includes the need to educate real estate sales agents and encourage them to supply the data appraisers need to produce credible reports.

While not the only carrot persuading buyers to opt for a solar-powered house, Zillo researchers found in 2019 that when solar panels were mentioned, sellers of entry-level homes netted 40% more than those that didn’t.

Where Can You Find The Greatest Appreciation of Value?

According to the same Zillow study mentioned above, they created a nice chart showing both the percentage increase from solar and the actual dollar amount increase by location. Check out this pretty cool chart they made here:

While it makes sense that New York and California will be up there, given they have some of the highest rates in the country, it was interesting to see Orlando being a standout city as well. Orlando has roughly half-price electric rates vs. the former states mentioned.

Others Take The Data Further

Others have extracted some nice data from the Zillow study as well, for example, creating a nice top-10 list. The list of these states contains both the highest home value percentage increase from solar, and also the nominal gain as well.

Here’s the top 10 states with the highest solar premiums, according to Zillow’s findings:

StatePercentage Premium
Value Added
New Jersey9.932.3
North Carolina4.89.0
New York3.611.0
South Carolina3.55.9
Value added to a median valued home according to Zillow’s research.

Advice on Estimating Solar Panel Home Value Increase

SolarReviews, which has offices in California, Oregon, Colorado, and New Jersey, has also undertaken research to establish how energy upgrades including home solar panels impact home value.

They have a free solar calculator that can help you estimate the probable increase in the value of your property if you install solar panels. This works in tandem with Zillow’s Zestimate values.

A screenshot of the results from the Solar Reviews AI solar calculator link, showing our net-zero home renovation project with simulated solar panels on the roof, along with all the calculations.

Our Own Net-Zero Solar Home Renovation – The Home Value Story

Having just completed our first net-zero home renovation, I experienced both setbacks and some wins on the subject of home value with solar energy.

Solar was the key part of the project to make the home truly net-zero (Including powering the Tesla Model 3 100%), after a number of efficiency measures were done first. So it was going to happen anyway to reach the goal, regardless of home value.

In terms of home value, or even getting my money back after spending $21,500 on the 9.38KW solar system on the roof, it became very clear early on that these challenges existed:

  1. This was literally the first and most affordable net-zero home in the area. The appraiser of 25 years who appraised the home, who was great to work with, had literally never seen a home like this done before.
  2. Given that first point – there were also no comparables to compare the home with when trying to accurately value the home.

Given this situation, adding the solar (per both he and the lender), would not add significant value to the home on paper.

Why on paper? Because due to the requirements of the lender and using the traditional way to appraise homes in this area, I would technically only get back a fraction of what the solar system cost.

What happened was that technically he could only give about $6,000-7,000 more on the home value per the lender’s requirements. This was because in this area (Lee County, FL), there just weren’t any proven or standard ways to value solar systems yet. I knew this going into the project, so I wasn’t surprised.

An overhead drone shot of our first net-zero home in Cape Coral, Florida. It shows a newly renovation white 1,836 sq ft home with a big solar system on the roof.
Our finished net-zero home renovation project in Cape Coral, FL.

This sounds like bad news, and again, on paper, it is. Though when I spoke with the appraiser after the appraisal was submitted to the lender for the refinance, the good news came.

Even though the house appraised at $275,000 total, he said realistically, based on the renovation and net-zero aspects, like saving $200-250 per month between electricity and gas savings (with the EV), it would no doubt sell for $305,000 to $315,000 on the market.

Translated, he told me that the gap between the required/traditional metrics used to value homes and the real value of it was upwards of $40,000 or 12.6% higher than on the “on paper” value.

This home was and is a personal long-term hold for me, so the worst case is I can borrow less on the mortgage, yet know that the real equity in the home is maintained and growing.

I have also since seen more evidence that net-zero and solar homes are rapidly becoming more desired in the market. Without any doubt, it will only become more popular and mainstream.


We’ve covered a lot, but hopefully, that gives some solid history, research, and some conclusive evidence of how adding solar might affect your home’s value. There’s a lot to consider for sure.

It seems that the question isn’t, “Does solar increase home value?”, but rather, “By how much do solar panels increase home value?”.

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