Do Solar Panels Increase Home Value? 6 Factors to Consider

As homeowners consider investing more heavily in renewable energy, the decision often comes down to whether or not installing solar panels will boost their home's market value. Homes equipped with solar installations can see an increase in value, attracting buyers willing to pay a premium for energy efficiency. Plus, homeowners considering home additions can easily fold solar installation into the construction process.

However, the extent of this value-added feature varies widely depending on geographic location, local electricity costs, and the size of the installation. This variability raises the question: under what circumstances do solar panels make financial sense for homeowners?

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Key Considerations for Solar Panels

• Solar installations typically boost home values by 3% to 5%, but increases of up to 10% are possible in certain climates and markets.
• Homes with solar panels often sell faster than those without.
• In sunny areas like Calgary, homeowners enjoy the dual benefits of increased home values and significant electricity savings.
• Market trends show a growing demand for energy-efficient homes, further increasing property values.
• Properties equipped with newer, well-maintained solar installations are particularly attractive to buyers.

Can Solar Panels Increase Home Value?

Can installing solar panels really boost the value of your home? Many homeowners ponder this question as they consider investing in renewable energy. Prospective buyers committed to installing solar and deciding between a condo and a house may even favour the freedom that detached home ownership offers.

Research indicates that homes with solar panels fetch a higher price on the market—typically increasing home value by 3% to 5%—and sell faster than their non-solar counterparts. This rise can sometimes translate to an additional $6,000 in value for every kilowatt of solar installed.

The financial benefits of solar panels add value to homes in several ways. First, immediate energy savings substantially reduce monthly electricity bills, enhancing the home's appeal to cost-conscious buyers. The impact of reduced electricity bills on your living costs in Calgary or elsewhere in Alberta can’t be overstated.

Second, the appeal of solar panels isn't just in immediate returns—you also have to think about long-term gains. As energy prices continue to climb, the value proposition of homes with solar panels becomes even more compelling.

This trend reflects a growing market demand for energy-efficient and environmentally friendly living spaces, which can increase home value.

Why Buyers May Want Solar Panels

Buyers may prefer homes with solar panels for several compelling reasons. They’re likely attracted to the substantial savings on energy bills, a benefit that starts immediately upon installation. Beyond financial incentives, they might also align with the values of solar panels, which help contribute to environmental sustainability and offer energy independence. Paired with the use of sustainable building materials, a solar-equipped house can offer tremendous efficiency.

Savings on Energy Bills

Homeowners who install solar panels are likely to see significant savings on their utility bills, ranging from 5% to 20% on the lower end to as high as 90%. Those savings could represent thousands of dollars each year for homeowners living in Alberta, where electricity prices are considerably higher than the national average.

This reduction in monthly utility bills is one of the main reasons why solar panels add value to a property. Buyers are attracted to homes with installed—and especially fully owned—solar systems because they anticipate lower energy costs, making these properties more appealing in the real estate market.

The savings on energy bills are substantial over time. Solar energy offers a stable alternative, protecting homeowners from unpredictable increases in energy costs. Moreover, solar energy is a clean energy source. By choosing homes with solar panels, buyers support environmental sustainability while also securing financial benefits.

Better For the Environment

Solar panels represent a significant step toward environmental sustainability, markedly reducing a home's dependency on fossil fuels. Most of Calgary’s best master-planned communities—a type of neighbourhood exploding in popularity—offer sustainable features. In some cases, solar panels come standard on all homes! 

By generating clean, renewable energy, these installations play a pivotal role in combatting climate change, slashing greenhouse gas emissions that traditional energy sources emit. Homeowners and buyers alike are increasingly drawn to these environmental benefits. 

Putting it into perspective, over 80% of buyers believe energy-efficient features are important in their housing choices. Though solar panels will increase the cost of building a house in Calgary, those willing to make the initial investment will see savings over an extended period. 

Energy Independence

Energy independence ranks high on the list of reasons people are drawn to homes with solar panels. As utility costs climb, more homebuyers turn to solar power as a solution.

Investing in solar reduces reliance on unpredictable energy markets and promises considerable savings on electricity bills. Homes equipped with solar energy systems can also appeal to those who prioritize self-sufficiency. These properties offer a hedge against future energy price hikes, making them particularly attractive in regions with escalating utility rates.

What's the Return on Investment For Solar Panels?

Why consider investing in solar panels? Many homeowners find that installing solar panels isn't just about contributing to a greener planet—for many, it's also a smart financial decision.

The return on investment from solar panels can be quite compelling, particularly when considering the increase in a home's value. On average, solar panels increase a home's value by about 4%, translating to an increase of around $22,000 for homes in Calgary’s City Centre, where median prices fall around $550,000. 

This premium reflects the current market trend: buyers are willing to pay more for environmentally friendly living spaces and long-term energy savings.

Homeowners can also benefit from solar tax credits, which enhance ROI by reducing the upfront costs associated with installation. Calgary’s Clean Energy Improvement Program (CEIP) offers tremendous incentives for property owners installing solar and other sustainable systems. These financial incentives—combined with the potential to save on monthly energy costs for decades—can make solar panels a financially wise choice for increasing a home's value and achieving substantial returns on investment.

Factors That Influence Solar Panel Value

Before investing in solar panels, you should know that several factors can impact how much value you’ll be able to add. The climate and position of the panels on the roof can either optimize or reduce the system's efficiency, affecting overall energy production. Just as importantly, you’ll want to consider the age and condition of the panels, coupled with regional energy costs.

Climate

Local climate conditions play a pivotal role in the effectiveness of solar panels, significantly impacting their energy production and the subsequent increase in home value. In sunnier regions, solar panel systems can thrive, maximizing energy output and offering greater savings on electricity bills. 

Calgary is the sunniest city in Canada, so homeowners here have tremendous incentive to go solar. This advantage makes homes with solar installations more appealing compared to homes without, especially in areas where utility companies charge high rates.

The value added by a solar panel system isn't just about the home’s exposure to sunlight; broader weather patterns also play a significant role. For example, areas with fewer cloudy days annually experience more consistent solar energy production. This reliability can significantly reduce homeowners' reliance on traditional power sources, leading to substantial savings over time.

Position on Roof

The placement of solar panels on a roof significantly impacts their efficiency and a home's market value. South- or west-facing roofs with minimal shading maximize energy output, making the property more appealing to buyers in regions with high electricity costs. 

Homes in West Calgary are excellent candidates due to their elevated city location, which provides mountain views and sun exposure. A well-positioned system can turn solar into a standout feature, enhancing both savings and sustainability.

Age of Panels

As solar panels age, their efficiency declines, affecting their contribution to home value. Newer installations with longer warranties are more attractive, offering higher energy output and fewer replacement concerns. Since panels generally last 25 to 30 years, buyers may be wary of older systems nearing the end of their lifespan or warranty period.

If you’re shopping for new-construction homes or building a custom home, consider installing solar panels during construction or upon purchase to get the most value.

Condition of Panels

Beyond age, the condition of solar panels influences their impact on home value. Well-maintained systems with documented upkeep and performance metrics reassure buyers and enhance marketability. Neglected or damaged panels, however, can deter interest due to potential repair costs.

Energy Costs in the Area

Higher electricity rates make solar-equipped homes more attractive due to substantial long-term savings. As utility prices rise, buyers see greater value in solar installations, which reduce energy expenses and align with sustainability trends. Government incentives can further enhance the financial benefits of owning solar.

Ownership

Homeowners who own their solar panels can hope for a 3% to 5% increase in home value depending on the above conditions, but leased systems aren’t as valuable and can complicate home sales. Larger systems that generate more power offer even greater financial benefits. Unlike leased systems, which may complicate home sales, owned panels enhance a property's appeal and marketability.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

See if Solar Panels Are a Smart Investment for Your Home

Solar panels have the potential to boost home values and make a home stand out in a competitive market; they can also attract eco-conscious buyers, leading to faster-selling properties. While the return on investment varies, with average homes seeing a 3% to 5% increase in sale prices, location and energy costs play a crucial role. Integrating solar technology into homes isn't just good for the planet—it's a smart financial move that often pays off in today's market.