How Much Do Solar Panels Increase A Landed Home’s Value in Singapore? We Break It Down

How Much Do Solar Panels Increase A Landed Home's Value in Singapore? We Break It Down
How Much Do Solar Panels Increase A Landed Home’s Value in Singapore? We Break It Down

When people think of home renovation projects to go green or increase their home value, a major upgrade like solar panels is unlikely the first thing that comes to mind. But with electricity tariffs rising and more becoming environmentally conscious, you may be wondering if installing solar panels in your home may be a worthwhile investment.

For those who live in HDB flats, installing a solar panel might be more tricky as you’ll have to get approval and abide by Common Property and Open Spaces rules. But if you live in a landed property, you don’t have to ask for permission at all!

Not only can solar panel installation reduce your electricity bills in the long run, but also the renewable energy system can potentially increase your home’s value. So, exactly how much can solar panels increase your home’s value? With some help from experts at Solar AI Technologies, we’ll break down the costs of a typical rooftop solar panel installation on a landed home. 

Comparing Landed Homes Prices: With and Without Solar Panels

Let’s play spot the difference between two semi-detached properties, A and B.

Property A is a brand-new semi-detached home located a short eight-minute walk from Novena MRT station, with a 6,314 sq ft floor size and a 3,251 sq ft land size.

Property B is also a brand-new semi-detached home located a nine-minute walk from Tan Kah Kee MRT station, with a 6,400 sq ft floor size and a 3,300 sq ft land size.

Both have five bedrooms, six restrooms, and are situated in the Novena area, and are similarly sized. Not to mention, both of these homes are spread across two and a half storeys and have swimming pools and personal lifts.

However, when it comes to price point, property A has a listed price of $10,950,000 whereas property B has a listed price of $10,300,000. So, why can property A be listed at hundreds of thousands more than property B? You guessed it: property A is powered by solar panels.

Granted, there could possibly be other confounding factors contributing to this difference in price (e.g. personal electric vehicle charging point). However, it remains that solar panels can certainly be a marketable attribute to boost your home value in Singapore. 

But in general, solar panels can increase your home value by approximately 3% to 4%. For landed homeowners, this is certainly good news if you decide to install your very own rooftop solar system. 

How Much Do Solar Panels Cost in Singapore? 

On average, solar panel installation costs can range from $10,000 to $50,000. You can use online solar assessment tools, like this one by Solar AI, to get a more accurate cost estimation for solar panel installation on your roof.

Most solar panels come with a 12-year product warranty and a 25-year power output warranty.  These warranties generally cover one-for-one replacements of any physically defective equipment. 

Meanwhile, solar inverters usually have a 5 to 10-year product warranty. As these are more often the part of the system to encounter issues, they usually need to be replaced at least once throughout the lifetime of the solar energy system. The cost of an inverter can range from $1,000 to $2,500, or more depending on its capacity. 

Regular maintenance and cleaning costs for your solar panel system usually range from $300 to $500 per visit. Solar panel owners are encouraged to perform preventive maintenance once every two years. 

If you add up the initial installation amount and maintenance fees, you’re looking at a sizeable investment sum. So, why are people still willing to pay this much to have homes with solar panels?

How Can Solar Panels Make You Money?

Solar panels do involve some higher upfront costs, but the average solar panel has a payback period of four to seven years. That’s how long it takes for savings on your electricity bill to pay back the initial investment.

If you produce more electricity than you consume, SP Group even pays you for the excess solar energy reinjected into the grid. That means if you go on a business trip or vacation and are away for extended periods of time, you’re still generating electricity and could be potentially earning. Talk about passive income! 

To further illustrate this point, let’s use an example of a 10 kWp solar system, with an installation cost of $20,000: 

  • Year 1 energy generation: 12,500 kWh 
  • Year 1 energy savings: $3,200 (assuming average annual energy consumption of 15,500 kWh) 

Using the above calculations, the initial investment cost of this solar system will be paid in approximately six years. Thereafter, all the free solar energy produced counts towards your profit. 

Decreasing Value of Solar Panel Systems Over Time

As with most items, solar panels work best when they are new; they are at their maximum efficiency when first installed. Over their lifecycle, panels do lose an average of 0.5% production capacity year on year. The exact degradation rate depends on different panel manufacturers, which your solar installer may include in their proposal. 

Still, the performance warranty most solar panels come with ensures that they should still be producing at least 80% of their initial power output after 25 years. With each year, we can add a 0.5% decrease to the return on investment. 

Example 10 kWp solar system degradation: 

  • Year 1 energy generation: 12,500 kWh 
  • Year 25 energy generation: 11,080 kWh 
  • Total energy savings over 25 years: $101,000 (assuming a 2% increase in electricity tariffs annually)

Solar Panel Total Return on Investment 

Still, the intrinsic value of the solar panel system itself contributes to the increase in home value. Typically, this refers to profit in the form of electricity savings over the typical 25-year solar panel lifespan. If you’re still unconvinced, we did some math for the total returns gleaned over a 25-year period for a 10 kWp solar system.

  • Initial Investment: $20,000 
  • Total returns: $101,000
  • Total average maintenance costs: $7,000 
  • Total profit gained over: $101,000 – $20,000 – $7,000 = $81,300 

Potentially, you’re looking at more than 400% ROI from a solar panel investment. Considering all the associated costs and returns, it’s easy to understand why landed homes with solar panels can command a higher price. 

Net-zero Homes in Singapore

In Singapore, we’re seeing trends that encourage the growth of demand for green property.

According to the PropertyGuru Singapore Consumer Sentiment Study H2 2022, 62% of Singaporeans are open to purchasing a net-zero home. A report commissioned by the BCA has also shown that homeowners are willing to pay a 3% to 4% premium for green homes.

If you’re wondering what a net-zero home is, it is a home that produces as much energy as it consumes. One way to do so is by using renewable energy systems like solar panels to generate electricity.

Mr Toh Eng Shyan, director of the Green Mark Department (Existing Buildings) Environmental Sustainability Group of the Building and Construction Authority (BCA) of Singapore, has noted, “Green buildings make economic sense and are a responsible investment for our collective future.”  

And with the various government initiatives in place to monetise solar energy and meet our nation’s net-zero targets as a country, it’s safe to say the future is looking green.

For more property news, content and resources, check out PropertyGuru’s guides section

Looking for a new home? Head to PropertyGuru to browse the top properties for sale in Singapore

Need help financing your latest property purchase? Let the mortgage experts at PropertyGuru Finance help you find the best deals.  

This guide was done in collaboration with Solar AI.

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