Solar panels have gone mainstream. With eco-friendly living and sustainable solutions becoming the norm, homeowners are increasingly turning to solar energy systems as a way to both save on energy costs and boost the value of their homes.
What were once considered a niche investment, solar panels are now often a sought-after feature in homes. Installing solar panels can help homeowners reduce their carbon footprint with a sustainable energy source, lower electricity bills, and gain other cost savings through energy credits and rebates.
Read on to see how these and other solar benefits can help increase the value – and potential resale value – of your home.
How do solar energy systems work?
To better understand the benefits of solar panels, let’s look first at how they work.
Solar panels, or photovoltaic (PV) panels, harness the power of sunlight to generate electricity for our homes. They’re made up of individual solar cells that convert sunlight to direct current (DC) electricity (like the kind generated by a lightning strike). An inverter then converts that current into alternating current (AC), which is used as electricity to keep the lights on and everything else running in most homes.
Excess energy generated by solar panels can be stored in batteries or fed back into your local power grid through net metering programs. Your local utility or power company uses net metering to record the excess energy generated by a solar installation and applies it to the customer’s bill as credit toward energy drawn from the grid.
RELATED READ: What Is Net Metering and How Does It Work?
What do I need to know about installing solar panels?
While solar panels can be installed and used in almost any location or environment, the most important thing to take into account is the amount of sunlight your home receives. The more sun, the more efficient your solar energy system.
The construction, orientation and angle of your roof will also affect the efficiency, ease or difficulty of a solar installation. Can your roof support the weight? Is it shaded? Homes with south, southeast and southwest facing roofs are among the best candidates for solar panels.
Other things to consider about installing solar panels:
- Your home’s size and current energy consumption. Set realistic goals for the amount of electricity you need to produce.
- Your budget. Use an online solar calculator like this one (for Arizona) to find out what you should pay for solar based on recent installations in your zip code. Calculate what system size you need and how quickly it will pay for itself after rebates.
- Local solar planning regulations and permitting procedures to ensure proper installation. Work with a reputable solar company to make sure your system is eligible for and you can take advantage of available solar credits and incentives. (Keep reading to find out more about solar incentives below. 😎)
What are the costs of installing and maintaining solar panels?
The cost of installing a solar energy system varies widely depending on your location, the size of the system and the quality of its components. However, the initial investment in solar panels is often offset by substantial long-term savings. Federal and state incentives, tax credits and rebates can significantly reduce your upfront costs.
Solar panels are pretty low maintenance. Periodic cleaning and the occasional replacement of parts usually takes care of it. Most solar panels come with warranties and can last for 25 years or more.
Are solar panels a good way to increase my home’s value?
Installing solar panels can be a wise investment to increase the value of your home. Numerous studies have shown that solar-equipped homes have higher resale values and sell more quickly than those without solar panels. For example, a recent Forbes article reports that according to the National Renewable Energy Laboratory, every dollar that a solar panel saves you on your electrical bills increases the value of your home by $20. And according to Zillow, homes with solar panels sell for 4-5% higher than those without them.1 So if your home is valued at say, $300,000, installing solar panels could potentially add $12,000 to $15,000 to its resale value.
Especially in today’s environmentally conscious market, solar panels are often seen as an attractive selling feature. Buyers may not only be attracted to the prospect of lower energy bills but also the idea of reducing their carbon footprint and investing in a more sustainable lifestyle.
How much can I expect to save compared to typical energy costs?
The amount you can save with a solar energy system depends on various factors, including the size of the system, your location and energy consumption. However, it’s not uncommon for homeowners to reduce their electricity bills significantly, or even eliminate them entirely, with the right solar setup.
According to research by Marketwatch.com, solar panels can save you over $30,000 in energy costs over time. The average annual savings from solar panels in 2023 is around $1,346. That’s based on a 6-kilowatt (kW) home solar system generating 9,000 kilowatt-hours (kWh) of energy at the average national electricity price of 14.96 cents per kWh.
Your exact savings will depend, of course, on your specific circumstances. That’s why we also recommend consulting with a solar professional for a personalized estimate.
How do solar credits work?
Credits for solar energy can make converting to solar even more financially appealing, so be sure to research what’s available in your area.
Solar credits are financial incentives provided by the federal and local governments to encourage the adoption of solar energy. They can come in various forms, including tax credits, rebates and performance-based incentives.
One of the most well-known solar credits is the Federal Investment Tax Credit (ITC). This credit allows homeowners to deduct a portion of their solar installation costs from their federal taxes. It can amount to a significant reduction in the upfront cost of installing solar panels.
What kind of financing is available for installing solar panels?
According to Bankrate.com, the average solar panel system in 2023 costs about $31,558 before factoring in tax credits and solar incentives. The good news? There are several financing options available to make the switch to solar energy more affordable. Here are a few:
- Cash Purchase: While this requires a significant upfront investment, paying for your solar panels with cash offers the quickest return on investment through energy savings and potential tax incentives.
- Solar Loans: Solar loans are specifically designed to finance solar installations. Many solar companies offer their own financing. These loans can have favorable terms, low interest rates and are typically structured so your monthly energy savings often exceed your loan payments. But buyer beware! It’s common to see solar companies offering extremely low interest rates of 1-3% on solar loans secured by real estate. But to offer rates significantly lower than other types of financing they often come with “dealer fees.” These can be charges of 15-25% of the solar cost added to the initial loan amount to lower (as in pre-pay) the interest rate. Be sure to read any loan agreement carefully. You may want to look into a home equity or other personal loan to avoid such fees.
- Power Purchase Agreements (PPAs): With a PPA, a third-party provider installs and maintains the solar panels on your property, and you agree to purchase the electricity generated at a fixed rate. While you may not own the panels, you can enjoy immediate savings with little to no upfront costs.
- Solar Leases: Similar to PPAs, solar leases allow you to use the solar system without owning it. You make regular lease payments, which are typically lower than your current utility bills, and the leasing company takes care of maintenance and repairs.
With so many benefits – including energy savings, increased home value, as well as tax and other incentives – installing solar panels is an attractive option for homeowners looking to make the transition to clean, renewable energy while boosting their home’s resale value.
Looking for your best way to sell with solar? Offerpad can make offers on homes with solar panels. Or if you’re looking to buy a house and install solar panels, Offerpad Mortgage LLC offers energy efficient mortgages so you can do both at the same time. Offerpad Mortgage can also help homeowners who want to refinance their home loan to add solar and pay off debt. Yep, there’s a program for that, too.
Whatever your home selling, buying or financing needs, you have options with Offerpad. Get started here: