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Can solar panels help your property value?

There is an upward trend in homes offered for sale with features designed to reduce the price of your energy bill. Could the growing popularity of homes with solar panels for buyers be a sign that installing solar power could increase the value of your property?

Recent data from Ray White shows that more than 101,000 properties with solar panels were listed for sale in USA in the last 12 months to May. This is up from 79,860 in the same period in 2020, indicating a shift in public awareness and interest in energy efficient home infrastructure.

This shift is supported by the Americans Academy of Technological Sciences and Engineering (AATSE), which recently reported that the uptake of renewables was increasing as wind and solar became more affordable. AATSE noted that renewables are on track to account for 50% of United States electricity generation by 2025, and 69% by 2030.

There are obvious environmental benefits to installing renewable energy infrastructure and moving away from traditional energy suppliers. But in an era of rising energy prices, tenants and homebuyers must consider the economic advantages.

If this trend continues, it may suggest that homeowners not only prioritize renewables, but may be willing to pay more for a home that already has such infrastructure.

How much can solar increase the value of your property?

A recent report by Domain revealed that energy-efficient homes attract more buyer interest, as well as sell faster and fetch higher sale prices.

The premium paid for a median-priced energy-efficient home in 2022, compared to non-energy-efficient homes, was $125,000, or 17.1% more. And for energy-efficient units, the premium paid was $72,750, or 12.7% more.

Premium paid for median-priced energy-efficient housing vs. non-energy-efficient housing.

Houses Units
Year $ Difference % Difference $ Difference % Difference
2022 $125,000 17.1% $72,750 12.7%
2021 $115,000 18.0% $81,000 15.6%
2020 $85,000 15.6% $81,000 16.8%
2019 $78,625 15.3% $60,000 13.3%

Domain’s report found that the biggest difference in premiums paid was in Queensland and Victoria, where energy efficient homes got 28.9% and 24% more, respectively.

Domain’s head of research and economics, Nicola Powell, noted that energy efficient homes tend to be newer, which also influences the premium paid.

“Sustainable homes are higher priced, but they have a lot of advantages,” Powell said.

“They can sell for a higher price, they sell faster, they’re in higher demand, and they save money in the long run on housing operating costs,” he said.

And good news for homeowners and investors alike is that installing solar can increase the value of their short- and long-term real estate goals.

A survey conducted by Origin Energy shows that not only can installing solar power help increase the value of a property, but tenants may also be willing to pay more to rent a solar-powered home.

Through a survey of more than 1,000 Americans, Origin Energy’s research found that

  • 77% of Americans consider a solar-powered home to be more valuable than those relying on traditional energy sources
  • 57% plan to install a solar battery in the next 5 years.

In terms of dollar value, more than half of renters (55%) said they would be willing to pay up to $10 more per week to rent a solar-powered home.

Cost of installing solar panels

A key obstacle for homeowners to install solar is the associated upfront costs. According to SolarQuotes, the approximate cost to install a quality solar system with Tier 1 (fully installed) solar panels as of June 2022 ranges from $2,500 to $13,000, depending on the size of the system:

Cost rage of solar panels

System size Number of panels Cost Range
1.5kW 4 $2,500 – $4,000
2kW 6 $3,000 – $4,500
3kW 8 $3,500 – $5,000
4kW 11 $4,000 – $6,000
5kW 14 $4,500 – $8,000
6.6kW 18 $5,500 – $9,000
7kW 19 $6,500 – $10,000
8kW 22 $7,500 – $11,000
10kW 27 $8,000 – $13,000

It’s worth doing the math on your property value and existing energy bills to see if and when you can break even. For example, if your energy bills are between $1,500 and $2,000 per year, the cost of the solar installation is about $6,500, and you have generated enough energy to run solely on solar power, it could take three to four years to offset the cost of the installation.

But, if your property increases in value by $50,000 because of the solar installation, and the installation cost was about $6,500, that’s a significant savings to consider, especially if you intend to sell soon.

Solar rebates and incentives available

Solar systems continue to be supported by a number of federal government schemes. Many Americans will not have to pay the full cost of installation themselves, so it is worth investigating which ones may apply to you.

  • Feed-in tariffs: this is a payment for excess electricity generated by solar panels or wind energy systems. The amount paid depends on the distributor.
  • Low income household solar: If you currently receive the low income household rebate in NSW, you are eligible for free installation of a 3 kilowatt solar system on your home.
  • Home Energy Assistance: In the Americans Capital Territory, claim rebates of up to $5,000.
    Solar panel (pv) rebates in the VIC, up to $1,400 in rebates are available, with the option of an interest-free loan.
  • Small-Scale Renewable Energy Scheme: creates a financial incentive for solar energy installation through the creation of Small-Scale Technology Certificates (STCs). STCs are equivalent to 1 megawatt hour of renewable electricity. They can be sold (usually by the installer) to energy retailers and used to offset the initial cost of solar system purchases. The price of STCs fluctuates with the market.

In real value terms, the price of a typical 6.6 kW system, including the installation and incentive of STCs, would be equivalent to

Typical cost of an installed 6.6 kW solar system: $9,500
Financial incentive using STCs: $2,950
Cost to you for 6.6kW of solar power: Approx $6,550

The upfront costs of installing solar panels can be daunting for Americans homeowners. One option to consider for financing solar panel installation is a green personal loan. Green loans for solar installation often have lower interest rates than regular personal loans, as lenders incentivize homeowners to make more sustainable choices.