Sustainability and environmental awareness may be the key to the future, but will they add value when you sell your home? All over the province, homeowners are installing solar panels on their rooftops and in their backyards. Some are doing it for the right reason; because they want to do their part to protect the environment. Others do so because they believe they’ll receive a payoff through energy savings and increasing their home equity. It’s easy to see why many people believe solar technology is a smart investment.
A quick Google search brings up pages upon pages of praise of solar panels. Even if you don’t plan on selling your house, think of the energy savings!
But before you commit to any contracts or invest thousands of dollars to install a bunch of solar panels all over your roof or yard, there are a few things you should know.
Solar Contracts: What Are They and How Do They Work?
In 2009, the Ontario government introduced the “MicroFIT Program.” This initiative gave homeowners the opportunity to become mini-suppliers of hydro to sell back to the province. You’ll still hear people talk about this program to this day about how they’re going to make money from solar panels.
What many people don’t realize is that the provincial government shut down the program in 2020. There are still benefits to adding solar panels through federal government programs. For example, you may qualify for a $5000 grant to help with installations costs under the Canada Greener Homes initiative. And provincial policy changes frequently.
It’s not out of the realm of possibility that they will introduce other incentives to entice people to add green updates to their homes. However, the opportunity to generate monthly income from solar panels is in the past, at least for now.
Are the Cost Saving Benefits of Solar Panels Worth it?
In Ontario, the average cost of hydro is $0.13 per kWh, or $130 per month based on 1000 kWh. Adding solar panels reduce the amount of electricity you use from the grid. If you reduce your usage by 500 kWh, your average bill can drop by $65 every month. If hydro rates stay the same, you’ll save $11,700 after 15 years, or $15,600 after 20 years. And Ontario’s net-metering system will give you energy credits if you ever generate more electricity than you use. However, setting up a solar system can be very expensive, and it can take years to see any worthwhile savings.
Your total cost will depend on the size of your home and energy requirements, but estimates range from $15,000 to $22,000. Even with government grants, this is a significant expense. This means installing solar panels is only worth it if you’re in it for the long-term haul.
Will Solar Panels Increase the Value of Your Home?
On paper, solar panels can add 3-4% to the overall value of your home.
If your home is worth $500,000 now, you might expect to add $15,000 to $20,000. However, the increased value on paper doesn’t guarantee a higher sale price.
Do you want to know what small steps you can take that will increase the value of your home? Here are some ideas to get you started:
- Preparing Your Home for Sale in Three Steps
- Renovating vs Selling Your Home As-Is
- 2022 Trends That Help You Sell Your Home and Which Ones to Avoid
We are going against the grain, but we’ve worked with many homeowners who were disappointed when their investment in solar panels didn’t pay off. Buyers generally say that “green features” mean a lot to them when looking for a new house. However, when push comes to shove, very few people are willing to pay more. When a less expensive listing comes up, that’s what they will choose almost every single time. And we can’t even tell you how often we hear people talking about “that house on the corner with the ugly solar panels.”
If you’re thinking of selling your house soon, we suggest holding off on solar panels. One day, they will be more worth it than they are right now. Other green initiatives like thermal windows and high-efficiency HVAC systems can do far more to increase the value of your home in the short term.
The Future of Solar
As time goes on, things will likely change. For example, the cost of installing solar technology is expected to drop by 30% over the next few years as more people participate. New government incentives may come into place to make it more worthwhile. And as people become more environmentally conscious, they will eventually be willing to invest in homes with clean energy.
For now, solar panels may be worth it to you as a lifestyle choice, but not to increase the selling price of your house.
Do you want to know what your house is currently worth? You can get a free home evaluation by Guelph’s Number One Real Estate Experts here.