Will residential solar panels hold resale value?

My wife is getting quotes on putting solar panels on our house. I am not too keen on this but quotes are free.

They did a pretty good analysis and the payback period in today’s dollars is about 10 years. I might do it if I thought I would be in this house at least 20, but I don’t think so.

So if I drop $20K on this, does it have any residual value to a buyer? Or if I move in 5 years, I’m just giving it away?

Having sold a house with panels recently, I would say it has a small value, but not a lot. I talked to the agents about it and they tended to agree. Being able to show the electrical cost difference and e-credits sale value does help though. Our eventual buyers did seem to like the low electrical cost, especially has the house uses heating oil. {Oil has become a big red flag in NJ at least.}

Honestly a whole house gas generator probably means more to resale and still isn’t going to mean a lot.

This is roaming into opinion, I’m not sure how it couldn’t, but I would say after 10 years, your $20,000 investment will probably be worth maybe $5,000 to the average buyer.

Another aspect of this to consider is the projected lifetime of solar panels (as well as their efficiency degradation over time). From this site:

Good quality solar panels need replacement when they’re 30 years old. (This is quoting the Department of Energy’s number.) Also, a solar panel loses between 0.3% and 0.8% of its output capability each year. So selling a sufficiently old solar installation is less attractive than a new one, although how much less attractive is a question for the buyer and seller to settle.

They don’t need replacement. The “useful life” is usually considered to be >=80% capacity, but obviously a panel producing 79% of the original amount is still valuable. Panel production doesn’t fall off a cliff; it just gets slightly less year by year. A 30-year-old installation is obviously worth less than a new one, but it’s not like a car where the residual value is close to 0.

That of course assumes people behave rationally and value the panels based on the expected return from savings on the bill. Which isn’t the case.

Fair 'nuff. I’m an engineer, but obviously not everyone is.

If not RoI, maybe a solar installation becomes a value liability because of fashion, like honey oak kitchen cabinetry or knotty pine paneling.

Installing solar panels in a home not only helps to reduce current monthly utility bills; it can potentially increase the home’s value by up to 4.1% more than comparable homes with no solar panels, according to recent solar research done by Zillow, or an additional $9,274 for the median-valued home in the U.S.

On that basis it doesn’t sound good for dropping $20,000 on installation. It could take you quite a while to get a savings of over $10,000 just to break even on the deal. If power outages are a problem you might find it worthwhile if you have a large storage battery also.

The most rational spin I can put on it is that because buyers can’t reliably determine the lifetime return of the panels (whether because the panels themselves are in poor shape or they can’t easily figure the net effect), they assign a low price to them. The market may need some kind of reliable third-party evaluator that can verify that the panels are functional and provide estimates for their amortized lifetime return, in the same way that home inspectors verify that there are no termites, etc.

This really seems like the best answer. An unbiased professional assessment of the objective value of a solar system installation so that a buyer and seller can fairly price it.

Last year we had panels installed for around $18000, and got $9000 back on federal and state tax credits.

My swag after buying a house. A house with paid for solar panels will help in the sale. When I was looking if the house had solar panels that was nice. When considering panels save me about $150 a month on my power bill of a house that I am paying $700,000 to $800,000 it is a little number.

This is a long term investment that has immediate and ongoing returns to you. As to resale value. That is not an easy calculation. Individual buyers can see it as a great positive. Some will not give it much consideration. But overall that can change in correlation to electricity costs. Consider the recent hike in used vehicle resale value. The value of a solar installation at selling time will be related to the electricity costs at that time. It may focus the buyers attention more on that particular value added aspect of your house. Even if the panels are old. The rest of the system infrastructure is in place. Only the panels may need to be replaced in a nearer time frame.

My quote notes that I would get $9698 in a federal tax credit, a $2100 county property tax credit, and $3100 in “SRECs” but I don’t know what that is.

But that’s not my question.

It’s very relevant to your question in that your investment is $10000 and not $20000.

SRECs are a yearly payment you get for the first 15 years IRC. They vary by state and year. They really help with the payback.

You earn one SREC for every 1,000 kWh (or 1 MWh) of electricity produced by a solar system . These SREC “vouchers” are valuable because many utilities must buy a certain number of them each year to meet sustainability requirements set by the renewable portfolio standard (RPS) in each state.

From here:

It’s in the ballpark of 5% of a $700k, 30y mortgage. Not that small. And electricity prices go up over time, while mortgage payments do not.

The figures in my post were net. The price is $37,000 and after tax credits and incentives is $22,000.

The quote is for a 14kW system, with annual production of 17,000 kWh, if anyone is interested

When my wife and I were house hunting 6 years ago, we looked at a place that had solar panels. The real estate agent said they were about 10 to 12 years old. After a bit of research, I found panels that old are on the downside of their life expectancy plus they would be another maintenance issue that goes along with home ownership. That was enough to walk away from that place.