How Much Does a Solar Panel System Increase Your Home’s Value?

Solar Panel Home Value

Do solar panels increase the value of your home? Yes. The big question is by how much.

One good way to calculate this is to determine how much the system impacts the affordability of the home:

  • Determine what the savings and income of the system will be over a year.
  • Look up the prevailing fixed interest rate for new mortgages.
  • Use the savings/income of the system to back out an implied mortgage.

It sounds a bit more complicated than it is.

Here’s an example:

Let’s say you have a system that produces $2,000 a year in savings/income.  If the prevailing fixed mortgage rate is 5% (or 0.05), then the increased value of the home is:

That would be $2,000 divided by 0.05  ===>  $40,000

That’s not bad.  Not bad at all.  It’s one of the few improvements to a home that actually increases its value (kitchens on down, don’t).

However, this is not at all unusual with real resilience.

Real resilience makes it possible to prosper in good times and bad.   It isn’t only valuable in a disaster.

Resiliently Yours,

John Robb

PS:  What would a system that produces $2,000 a year in saving/income cost?   Not as much as you think.  In fact, payoffs can be under 2 years, depending on where you live and how you install it.  I just finished a solar report that is going to blow the lid off of this entire industry.

PPS:  My motto:  say more with less.

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  • Ian of Wessex

    Why does this always have to be related to the ‘increased’ value of a home. Surely, people aren’t so stupid that they don’t realise property prices go up and down, the last few years being a prime example of the latter. In other words, if you installed a solar system 6 years ago your house value would have gone down.

    It would be far better to want to install a system purely to get ‘off-grid’, forget about making money with it. Start thinking about independence from corporations and governments. Start thinking about freedom.

    • John Robb


      Disconnection is a bad strategy. You weaken yourself needlessly. The best way to improve your power position relative to the system is to a) turn your oppositions strengths into weaknesses and b) increase your connectivity to your allies. You can’t do that by disconnecting/hiding. Long term, this method puts you into the position of negotiating your relationship to the system on your own terms (as a peer) rather than as a dependent.


  • Scotts Contracting, St Louis Renewable Energy

    Thank you for posting this article on how Solar can be translated into Property Economics.

  • Darren (Green Change)

    I sold a house with a solar power system about a year ago. In my experience, it added nothing at all to the value of the property. I’m in Australia.

    The real estate agent didn’t understand it at all, so I’m sure she didn’t plug it as a “feature” of the home, despite me giving her all the figures. Judging by the questions she passed on to us from prospects, I don’t think many of them understood anything about it either. In fact, some saw it as a liability, another thing that could potentially go wrong. I think people here don’t trust real estate agents at all (with good reason, in my experience!).

    Anyway, just a single data point to add to your observations. I do enjoy your posts!

    • Shlok Vaidya

      That’s interesting. The realtor industry isn’t great at adapting to change. The ones that do get new sources of value will do great though.

  • Annie Meyer

    This is a great simple way to show consumers what they will be getting with solar. At EnergySage, our goal is to make the process as easy as possible. For a more in depth guide as to why solar is a good investment, go here: Simple, easy to read language and graphs for visual aid make this page a comprehensive analysis of the financial benefits to going solar!

  • Truman

    This calculation is not a good way to look at the amount solar panels add to a house’s value. You are essentially asking the new home buyer to break even on their investment. Borrow the money at 5% to earn a 5% return. No one should do this.

    You should look at this as you would any other investment. If you can save $2000 a year, that’s exactly the same as earning $2000 in an investment. If the risk of that investment is greater, the interest you earn should be greater. I would put solar panels as a fairly low risk. The amount of energy they produce can be predicted years in advance. There is very low maintenance costs to reduce your return. No one expects the cost of energy to drop in the future which would lower the return. Local considerations would be rapidly growing trees in the neighbor’s yard and age of the roof.

    With that in mind, someone would be pretty happy with a 10% return on their investment, which would put the value of this system at $20,000 (simple interest). If you can get someone to accept a 5% return then it is worth $40,000. My guess is that it is worth something in between that.

    That’s all there is to it. Doesn’t matter what mortgage interest rates are. Doesn’t matter how much the system originally cost.

  • Dave

    I had just installed a 11.27kw DC system on my roof. comprised of 46 240w panels and 46 micro inverters putting out 9.89kw AC power. I have a 20 year contract to sell my electricity directly to the grid (I do not net meter). the contract price is $0.80. / Kwh. this is a fantastic price that will generate me $11,200 / year in revenue (on average).

    I just had my home appraised and the “professional” appraiser would not consider the income from the panels in my home. I spent $50,000 on this system and he stated that I would be lucky to get that back and the income can not and will not add value to the home. I wanted my home appraised at $200,000 based on the 20 year income from the panels plus I have a 1300sqft 4 bedroom, 3 bathroom, 25 year old home. he appraised my home with the panels at $120,000 and was very stern on the fact that the premium paid for a home with solar panels would never increase more than the depreciated cost of installing them. regardless of the income potential. I find it hard to believe that a system that only saved $2000 would increase the value of a home $20,000 – $40,000 when my home with $11,2000 a year only increased my home value by $45,000.

    • John Robb


      Unfortunately, your appraiser is an idiot. The way to access the value is based on the additional loan possible due to the reduction in cost. It’s that simple. It’s also a feature that strongly appeals to a large segment of the buyers.


  • Miguel

    I have the same experience as Dave. My home was just appraised and my $30k, 2 year old system added $0.00 to the appraised value of the home. He claimed that the banks would just cross out any added value due to a PV system. I’m not an expert by it is hard to swallow that.

    • John Robb


      Got it. That’s not a market appraisal — an estimate of what buyers will pay for it. You’d get that from a real-estate agent.

      Banks appraise items for purposes of collateral in a VERY conservative way. They want a price so low that the money they get from selling it quickly is close to appraised price. As a result, they tend to discount every improvement possible.


  • Dave


    I agree that that appraisel person was not quite on the ball. I made an error above in my email. that house was not assessed at $120,000. he assessed it at $102,000. I was originally assessed at $75,000 so this has not even added $30,000 to the value of my property. With an income that is more than enough to support the full loan payment as well as all taxes and Utilities, I find this hard to swallow. how can a system that generates $11,200 / year in revenue (not savings) not increase the value of the house by the discounted Present Value of the cashflow. How would you suggest having it appraised? I was thinking it should be the $75,000 + a discounted rate of the cashflow of approximatley $90,000. making the house worth $165,000. This is still essentiall a free house for someone since the panels will make all the morgage payments. do you agree or am I totally missing something?

    • John Robb

      What is the appraisal for? For a loan?

      In reality, a home (or anything) is only worth what someone will pay for it. The problem is that you are a little ahead of the curve on this, so you’ll need to educate buyers on what it offers. Fortunately, a home that nearly pays for itself is the dream of many, many people.

      Another option is to retain ownership of the panels and sell the house. It would take a bit of legal work to pull off, but it would be a cool thing to do.


    • John Robb

      Dave, Why don’t you send me some of the details on your situation. I’d like to analyze it a bit, and perhaps write it up (which may help you sell it).


  • dave

    Great comment. I think you understand.

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