Will Solar Panels Increase The Value Of Your Home?

Dan Hunter

March 4, 2021

Hi there solar enthusiasts and explorers, I hope you are enjoying the Canadian winter. I always look at January as the month after Winter Solstice: The optimist in me says every day will be longer and brighter than today. So come on Sun!

Today I will share with you an interesting article posted by a real estate broker from Calgary. While the article lists 6 key benefits to installing solar, I want to focus in on one big benefit that is often overlooked in the pay-off of going solar: The gain in the resale value of your home. So, will installing solar panels increase the value of your home? The author states that side-by-side comparison of solar homes versus non-solar homes illustrates a market-proven gain of 4% on average.  

By way of illustration, if your home's base value is $500,000, by going solar, you have just increased its value by $20,000, compared to homes without solar. If this were to be included in the payback calculation, using the cost of the system and its installation. Here's some examples and a little 'back of the envelope' math to help understand when the cost of solar would be paid off:

  1. For a 7kW system, with an estimated average cost of $3/kW (sourced by energyhub.ca), the $21,000 is almost all paid off, or in other words, you'll break even. The future real estate gain pays for the system, even before any savings from your lower electricity bill is considered - for the next 25 years, at least!
  2. If it's a larger 10kW solar system, using the same cost per kilowatt of $3 for solar, then only $10,000 of the cost of going solar would remain (from the $30,000 cost outlay), after subtracting the benefit of $20,000. In other words, two-thirds of the initial cost is covered by the capital gain in the future sale of your home. Only one-third of the cost remains, or $10,000.  To show how this remainder is paid off, we will use conservative estimates of the average Canadian electricity rate for 2020 of 13.5c/kWh (source: energyhub.ca, ex-Territories) and the average home usage of 900 kWh per month: your monthly bill would be around $120. With 100% of electricity covered by your solar system, the remaining cost would be paid off within 7 years.  
  3. And it gets even better, due to the following real-life factors:  
  • If this is your primary home, you don't have to pay any tax on the capital gains made from the sale of your home in Canada. That extra $20k on your solar-equipped home is yours to keep!
  • Large systems like 10kW will cover even larger, more valuable homes. The 4% gain from going solar on a $700,000 home is now worth $28,000 gain realized at sale, or even closer to break-even of the larger system - now the remaining cost of $2,000 could be paid off in a year and a half.
  • As homeowners, we know that utility rates go up every year. Energyhub states its an average 4% increase per year (and as a real-world example, it's gone up +66% in Ontario for the past 7 years!!!). So your pay-off would be even quicker applying this to your solar savings:  That $10,000 would be paid off in about 6 years. And lastly...
  • By using smart solar solutions available with custom designed kits and new advances in solar technology, feel free to get some advice from Solr Solvr, where we can show you how to only spend about $2-2.5/W to go solar and make greater savings as you go - so the cost of going solar can pay-off in less than 5 years.  

Are you ready to increase the value of your house by up to 4%? Start by getting a Free Assessment from us!

For a full review of the article, click here.