Do solar panels increase home value in New Mexico?
Solar panels bring many benefits, including savings on your electricity bills, the financial incentives to go solar, and even the environmental benefits. A solar energy system can also add value to your property. New Mexico is a very solar-friendly state, and you might be wondering how this translates to added value to your home.
Why do solar panels add value to a home?
There are multiple reasons why solar panels can add value to a home:
- The reduction in utility bills is one of the greatest benefits of a solar energy system. Reducing or even eliminating the money spent on electricity can yield great savings in the long run, especially considering the rising utility prices.
- Buying a home with a solar energy system installed is much more convenient. If a home is already equipped with a fully purchased solar energy system there is no need to install a new one. All that’s left is to maintain the current system.
- The environmental benefits of a solar energy system can also add value to a home. Especially with the movement for cleaner and more efficient homes.
- Added energy stability in case of grid outages. This is generally for solar plus storage systems that have a backup battery and solar islanding capabilities. Off-grid homes will rely on solar as their main and only source of energy. They are equipped with larger battery banks to stock up on power for days on end.
These are some of the reasons that solar can increase a home’s value. While these reasons give you an idea of how they increase a home’s value. The question is, by how much?
Amplifying value under the New Mexico sun: Unveiling the radiant impact of solar panels on your home's worth.
How much value can solar panels add to a New Mexico home?
Factors Affecting Value
The amount of value that solar panels can add themselves can vary. The factors that affect the added value of your solar panels are:
- Location is an important factor that affects the added value of your solar panels. New Mexico is a suitable state to go solar. The climate is suitable for solar energy, with cooler temperatures and long daylight hours. The cost of solar in New Mexico averages 13.6 Cents Per kWh, with the U.S. average at 13.72 Cents Per kWh.
- Local solar pricing will also determine the added value of your solar energy system. Solar energy system providers in New Mexico will offer different quotes on specific system configurations. You’d be looking at the kW output of your solar energy system and its price.
- The solar energy system’s age, output, and overall value will also factor into the added property value. You have to consider that a solar energy system is an addition to the property. If your system is capable of larger power output, it will also add to the value of your system. Depreciation will be determined by the age of the system, and the value of the components. If your components are expensive or scarce, it will also affect the added value of your system.
Added Value in New Mexico
The exact amount of value that solar can add to your home is hard to calculate. Although government and private companies have conducted studies to calculate how much a solar energy system can add to home value
- Studies conducted by Berkeley Lab note that homeowners around the country are willing to pay a premium of about $15,000 for a home with an average-sized solar array. With solar equipped homes sell faster in comparison to those without. The research was supported by funding from the U.S. Department of Energy’s SunShot Initiative.
- Zillow Research has also conducted a study that validates the added value of solar panels. Zillow analyzed the listing descriptions and transactions between March 1, 2018, and February 28, 2019. Homes with solar panels sold for 4.1% on average throughout the U.S.
- The National Renewable Energy Laboratory (NREL) notes from the Appraisal Journal, that every dollar saved on energy through solar increases home value by $20. This means that a solar energy system that saves $200 per year would also add $4,000 to the value of a home. What’s also worth noting from the survey is that the surveyed homebuyers say they would pay up to 10% more for a solar-equipped house.=
Keep in mind that you would have to purchase and own the solar energy system. The added value to your home won’t be counted with leased systems. According to Zillow, the average cost of a home in New Mexico from data through Mar 31, 2022, the typical value of a New Mexico home is $281,938. If solar can boost property value by 4.1%, that’s an added value of $11,559. This added value is not the only benefit to going solar in New Mexico.
How does New Mexico incentivize solar energy?
When we describe New Mexico being a solar-friendly state, we aren’t just referring to the climate, location, and cost of electricity. The state offers some of the best incentives in the entire U.S. for going solar. Here are some of the incentives New Mexico provides for going solar:
Sustainable building tax credit
The New Mexico state government will provide a tax credit if you install a solar energy system as part of sustainable building efforts in your home. To qualify for this incentive, it needs certification from the U.S. Green Building Council for sustainability. The certification level you receive will determine your credit.
Property tax exemption for solar
With the solar adding value to your home, New Mexico adds to this benefit by exempting the added value from your property taxes. This is another great addition that allows you to further benefit from your solar energy installation without having to worry about another added cost.
New Mexico state solar tax credit
The state of New Mexico provides its solar tax credit. This credit can cut down your tax payments by $6,000 or 10% off your total solar energy expenses, whichever is the lower of the two. This applies to agricultural, commercial, and residential solar installations. You can also combine this tax credit with the Federal Solar Tax Credit (ITC). The ITC provides a 26% tax credit for systems installed between 2020 to 2022, and 22% for systems installed in 2023. This means that you can take advantage of both incentives for a large amount of tax credit.
Get started with solar energy today
If you are looking to start your transition to solar energy, we are here to help. Our website also has a free online estimate tool that generates a personalized report for you from a simplified questionnaire. That report will contain the potential savings you can net, and the cost of a solar energy system installed on your property.