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Solar panels are, in most cases, a thoroughly worthwhile investment for your home. The payback time on solar panels in Australia typically varies between 4 – 7 years, while savings from a good system can be enjoyed for 25 years and beyond.
Our site’s calculations show that it’s possible to see returns of between $5 – $7 for every dollar spent on a new solar panel system.
Buying a home with solar panels already installed comes with the added benefits of lower electricity bills and a reduced carbon footprint.
The financial benefits indicate that solar should increase the value of your home. But, is that actually the case? Does solar increase your property’s value? And if so, by how much?
Studies confirm that solar increases home value
Multiple studies conducted by universities and private companies confirm that both buyers and renters are willing to pay more for properties that already have solar panels.
A 2018 study of 1,005 Australians conducted by Origin Energy found that 77% of Australians believe that a house equipped with solar energy is more valuable than a home without it.
Many other studies confirm that property value increases with solar panels, these include:
- Origin Energy – survey of 1,005 Australians (2018)
- University of Western Australia – Capitalisation of residential solar systems (2016)
- Australian National University – Solar and housing rents (2023)
- University of Wollongong – Improving energy efficiency
- Domain Sustainability in Property Report 2024
How much value does solar add to your home?
Of the 77% of respondents from the Origin study that believed solar increased the value of a property, 57% of said that they would be willing to pay up to $10,000 more for a home equipped with solar. While 60% would be willing to pay more for a house with both solar and battery storage.
In the same survey, 55% of renters said they would be willing to pay up to $10 per week more for a property with solar panels. A more recent study from 2023 by the Australian National University (ANU) found this number to be even higher, with respondents putting a value of $19 per week for rental properties with solar panels.
An earlier study from the University of Western Australia into the economics of residential solar systems found that properties with solar panels saw an increased property value of between 2.32% to 3.20%. At the time of the study, this represented a $16,124 and $22,240 premium on the median house price in Perth.
How to calculate the added value to your home from solar
It is possible to calculate the added value to your home by estimating the net present value (NPV) of expected future savings from a solar panel system. The value of a solar system varies depending on the system size, electricity usage, the cost of electricity, geographic location and the age of the system.
The table below shows the net present value of average lifetime savings figures for different size systems in Sydney:
| System size (kW) | Lifetime savings | Net present value (NPV) |
|---|---|---|
| 5 | $34,195 | $19,073 |
| 6.6 | $44,200 | $24,428 |
| 8 | $57,760 | $30,517 |
| 10 | $73,469 | $40,019 |
A 6.6kW system in Sydney with average electricity bills is expected to generate lifetime savings of $44,200. Using a discount rate of 5%, the present value of the future savings is $24,429. Therefore, it can be argued that the added value to a home with solar panels expected to last 25 years is $24,429.
The larger the system, and the more electricity you use, the greater the value of the solar panels. However, the present value diminishes with each year the system ages.
* We have anticipated a 3% annual increase on electricity prices.
Energy efficient homes add even more value
Energy efficient homes with more sustainable features than just solar are even more valuable. Homes with sustainable additions like insulation, north-facing orientation, solar panels and double glazing sell for a premium. According to the Domain Sustainability in Property Report 2024, energy efficient homes sold for a 14.5% premium adding an estimated value of $112,000 to median house prices. For units, the value add was an estimated $70,000 or 11.7%.
| Property type | Price difference ($) | % Difference |
|---|---|---|
| House | $112,000 | 14.5% |
| Units | $70,000 | 11.7% |
The greatest price difference was in Queensland and Victoria, where energy-efficient homes commanded a premium of 23.1% and 28.8%, respectively.
It’s important to point out that energy efficient homes are likely newer, or have undergone some form of retrofit or renovation, that may contribute to their higher value.
Homes with solar sell faster and attract more interest
Adding value to your property is not the only benefit of solar panels, research suggests that energy efficient homes sell faster and attract more buyer interest.
The same Domain report, found that homes with sustainable features like solar panels attracted 16.7% greater interest and sold 4% faster and interest than other homes.
The value of solar panels on a rental property
If renters are prepared to pay $19 more per week more to live in a house with solar panels, we can work out the value given to the investment.
| Years | Additional income |
|---|---|
| 1 | $988 |
| 10 | $11,326 |
| 25 | $36,022 |
If the additional rental income per week is $19 with solar panels, then this equates to $988 of extra revenue each year. Over 10 years, the additional income is $11,326 – well over the cost of the system.
(*) These figures do not factor in the system size, electricity use or other data.
You may also be able to claim a deduction, or depreciation on the panels. It’s best to seek financial advice as this can vary on a case-by-case basis.
Buying and selling a home with solar panels
Whether you’re selling a property with solar panels, or trying to place the value of them on a house you’re interested in, it’s worth considering the following information:
The age of the solar panels
Solar panels are warranted to last 25 years and some modules even come with a 40-year performance warranty. If you are buying a house with solar panels, it’s worth asking when the solar panels were installed at the property.
Applicable warranties
Solar panel warranties vary for product and performance warranties. Product and workmanship warranties carry more value. The time remaining on a warranty is useful information for prospective buyers.
The quality of the solar panels
Not all solar panel systems are created equal. The solar panel cost can vary significantly between different manufacturers based on their quality. When assessing solar and home value, it’s worth considering the quality of the installed system as this is a pointer as to how long it will last and how well it will perform.
The size and output of your system
When buying a home with solar, you should ask how many panels there are. The size of the system influences the output and savings. A typical residential solar system varies from 5kW to 6.6kW. The higher the kW rating, the greater the energy production you can expect from the system. Additionally, systems fitted with solar battery storage are significantly more valuable and enable owners to utilise stored energy during off-peak production times.
Final thoughts
Solar uptake continues to surge in Australia with 37.03% of all households now having installed solar panels.
Homeowners are continually looking for ways to reduce their electricity bills. Results of recent studies, plus our own calculations, suggest that solar adds to the value of a home over and above the original purchase price of the system.
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