Do solar panels increase home value? If so, by how much?

Do solar panels increase home value

With skyrocketing energy prices, inflation and interest rates, many homeowners are looking to add solar panels to their property to tame these issues. What stops many is they don’t have a convincing answer to the question: Do solar panels increase home value?


Many homeowners want to do their bit and switch to renewable energy sources, yet they don’t know if adding a solar PV system to their home will provide an adequate return on investment.


National grid estimates that solar power accounted for 4.4% of the total energy used in the UK in 2022. In comparison, wind accounted for 27% in 2022, so there’s still massive room for us to use more solar power.


You have to pay for the system as the incentives to offer free solar panels have long gone and the current range of grants aren’t as generous. The bill could stretch into the thousands if not tens of thousands. So, there’s a high cost upfront.


However, there are several ways a system can pay for itself. You can use the energy it generates to lower your bills, meaning the cash you save can start to repay the investment. 


Using a government scheme called the Smart Export Guarantee (SEG), you can sell excess energy to the grid and use this money to repay some of the upfront costs.


The third way your solar system can pay for itself is by increasing the property’s value. But do solar panels increase home value, and if so, by how much? Let’s find out!



What are solar panels and how do they generate energy?

The most common type of solar panels on UK roofs is photovoltaics (PV). They capture the sun’s energy via layers of semi-conducting material such as silicon and create a flow of renewable electricity.


The electricity created is in a direct current (DC) and not the alternating current (AC) electricity we use in our properties to power devices such as the kettle.


A solar PV system harnesses daylight and turns this into energy. We average 11.4 hours of daylight per day across the year. The brightest months are May to August. It doesn’t need to be sunny to generate electricity. And sadly many believe this common myth.


There is plenty of potential for a solar PV system to generate electricity all year round and create more than you need. Any additional electricity over your usage can be sold to the utility grid at a rate of around 15p per kWh, generating around £80 – £110 per year on average.


The amount of electricity a system produces depends on the amount of light it receives and how you position your panels. For example, a south-facing garden will produce more electricity than an east or west-facing garden.


You need a sizeable roof in good condition, as solar panels take up a lot of space, usually around two square metres per panel.



solar PV system cost



What does a solar PV system cost?

While this might sound great, there is an upfront cost. You might assume there’s a high price to being eco-conscious, but that’s no longer true.


The government estimates that the upfront cost of solar panels has dropped significantly in the last 15 years. The average system is now 88% cheaper than in 2010.


According to the Eco Experts, the average solar panel system for a three-bedroom home today costs around £5,420 to install. Also, the government has slashed VAT on solar panels from 5% to 0% for the next five years.


You also have the option to lease your solar panels, meaning the upfront costs are minimal, or the company will offer free installation.



Can installing solar panels save you money?

Using solar to generate your own electricity can repay your investment in three ways. Firstly, you can save up to £522 on your electricity bills each year. Your system will have paid for itself in about 10 years just in reduced bills.


You can sell surplus electricity back to the utility grid, meaning you can recoup your investment even quicker. Use the Energy Savings Trust’s solar energy calculator to work out how much money you could save on your bill.


Thirdly, your house price could rise as more buyers are looking for homes with a solar system. So if you have one, you can demand a premium that could easily repay the upfront costs. Of course, when you move, you’ll lose the benefits of having the system, but you should turn a profit.



benefits generating renewable electricity



Any other benefits of generating renewable electricity?

You can significantly reduce your carbon footprint by generating your own renewable source of electricity. The Energy Savings Trust suggests a typical home solar panel system could save approximately one tonne of carbon per year.


At the end of the panels’ life, they can be recycled into new ones. So the entire process is fairly eco-friendly.



Do solar panels increase home value?

With house prices in a state of flux and rising living costs, it’s only rational to try and future proof our living standards. Making your home more energy efficient is one way to add value to your property while reducing the impact of the cost of living crisis.


The impact of these upgrades is a better energy performance certificate (EPC) rating and that adds value to your property. According to Money Supermarket, you could see a 14% increase in value if your home moves from a rating of G to A.


With solar panels in particular, if you can afford the upfront investment and the maintenance costs, it can make sense for you to become one of the million or so UK homeowners that have solar panels.


Sadly, there is no one size fits all fast rule as to how much value solar panels can add to the overall value of your property. It can range from 4% to 14%. Installing solar panels is unlikely to detract from the value of your home, even if they aren’t the most attractive feature visually.


Solar panels aren’t a great investment if you plan to move in the next year or so, as you’re unlikely to recoup the money you paid for them. Plus, it can be difficult and costly to move to a new property. There are better improvements to spend your cash on that provide return now.


So, do solar panels increase home value? They can produce an uplift somewhere in the region of 4% to 14%.