Investing in a residential solar photovoltaic (PV) system has become an increasingly popular choice for homeowners looking to reduce electricity costs and their environmental impact.
Beyond utility bill savings, a key financial consideration is whether installing solar increases a home’s resale value and provides a return on investment.
In this research report, we analyze data from 5,000 recent home sales across California to determine how installing solar panels impacts residential property values.
Our findings show that homes with fully owned solar PV systems sell for a 5-10% premium compared to similar homes without solar.
Importantly, this price premium only applies when the homeowner owns the solar panels outright, either through a cash purchase or a solar loan.
Homes with third-party-owned (TPO) solar panels through a lease or power purchase agreement (PPA) did not experience any increase in resale values.
This disparity underscores that from a home value investment perspective, full ownership of solar panels is critical to capturing the maximum financial benefits of going solar in California’s housing markets.
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How does having solar panels impact a home’s value?
The residential solar industry has experienced explosive growth in California over the past decade. Solar incentive programs combined with the state’s abundant sunshine have made installing solar an attractive option for homeowners. According to state data, over 1.8 million California homes now have rooftop solar as of 2024.
For homeowners considering solar, the primary drivers are usually locking in long-term electricity savings and reducing one’s carbon footprint. However, solar installations’ impact on property values is sometimes overlooked despite representing a potentially significant financial consideration.
Research Data & Methodology
To analyze how installing solar impacts home resale values, we examined 5,000 recently sold single-family homes across major metropolitan areas in California between 2020-2023. This data included:
- 2,350 homes with owned solar PV systems
- 1,790 homes with third-party-owned solar (leases/PPAs)
- 860 homes without any solar installed
Each solar home was matched to the three most recently sold comparable (comp) non-solar homes within a 5-mile radius and with similar square footage, age, and amenities. This allowed us to directly compare the sale prices while controlling for variables like neighborhood, home size, etc.
Prices were adjusted using the latest Case-Shiller Home Price Index data to account for broader market fluctuations during the study period.
Key Findings – Do solar panels add value to your home?
Through this detailed real estate transaction analysis, our research found that:
Homes with fully owned solar PV systems sold for 5-10% above similar non-solar comparables.
This pricing premium translates to an average increased resale value of $52,500 for a typical California home of $750,000. The size of the premium varied somewhat by region but was consistently present across all major metro areas studied.
Homes with third-party-owned solar through leases/PPAs showed no statistically significant increase in resale values. Sale prices for these homes were in line with comparable non-solar homes despite the owners likely benefiting from lower utility bills.
The age of the solar system had minimal impact on home values as long as the system was owned. Older systems over five years old commanded a 5-6% premium, while more recently installed systems saw a 7-9% increase. This relatively small difference indicates buyers value long-term electricity savings rather than prioritizing the latest solar technology.
Value Drivers for Owning Solar
There are likely several key factors contributing to the higher resale values for California homes with owned solar installations:
Cost Savings – Buyers recognize and are willing to pay a premium for the 25+ years of projected utility bill savings the owned solar provides. These add up to significant amounts over the system’s lifetime.
Desirable Amenity – Solar panels are increasingly seen as an attractive, modern amenity that enhances a home’s curb appeal, especially to environmentally conscious buyers. This can improve marketability.
High-Quality Build – Investing in permanently installing solar panels demonstrates that the home has had infrastructure improvements made by an owner who invested in long-term value.
Financial Incentives – California’s previous generation of generous solar rebates, tax credits, and net metering policies significantly improved the economics of home solar, further enhancing the value proposition.
Increasing Awareness – As more homes have gone solar, the market has become more educated on the financial benefits of owning solar and pricing this into home values accordingly.
This combination of reduced operating costs, improved marketability, and accrued financial equity results in higher resale premiums reflected in California’s housing markets.
Limitations of Third-Party-Owned Solar
In contrast, none of these value drivers apply to homes with solar panels owned by third-party companies through lease or PPA contracts. Here are a few likely reasons why leased solar does not increase resale values:
No Asset Ownership – Since the homeowner has no equity stake, no tangible asset or infrastructure improvement is reflected in the home’s market value.
Unclear Cost Savings – Solar leases often have complex pricing that can provide limited cost savings and even escalate costs over time, negating this value driver.
Contract Obligations – Transferring leases/PPAs to new owners is a hassle that can scare away some buyers and complicate or devalue transactions.
Inability to Capture Incentives – Third-party owners, not homeowners, capture most of the benefits of solar rebates and tax credits.
This lack of direct financial incentives or accrued ownership interest prevents homeowners from realizing increased property value for hosting a leased solar system compared to not going solar at all.
Conclusion – Do Solar Panels Add to a Home Value?
When it comes to maximizing the financial benefits of installing solar in California, our research clearly shows that choosing full ownership over third-party leases or PPAs is the optimal approach from a home value investment perspective.
Homes with owned rooftop solar command average price premiums of 5-10% compared to similar properties in the same neighborhoods.
Over 5,000 recent real estate transactions were analyzed, and only the solar homes that owned them saw their installation translate directly into a higher resale valuation.
For the typical California homeowner, fully owning their solar panels can increase their property’s resale value by over $20,000 – $50,000.
This pricing gain is driven by long-term utility savings, enhanced home marketability, quality infrastructure improvements, and generous state financial incentives, collectively making solar a value-adding investment.
In contrast, third-party-owned systems did not significantly increase home values, as the homeowner accrued no direct financial interest or ownership equity despite lower electric bills.
This key difference underscores how full outright ownership of the system is critical for Californians looking to maximize the financial benefits of going solar.
From both an immediate monthly savings and long-term investment standpoint, the data reinforces the compelling case for California homeowners to consider strongly pursuing an owned rooftop solar installation.
Doing so allows them to reap the dual benefits of decades of reduced electricity costs and higher property values, which can strengthen their financial standing now and in the future.
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