Buying a House With Solar Panels

Buying a home with a built-in solar power system can be a great investment. But before doing so, it’s important to understand what you’re getting yourself into.

By Emily Southey | 12 minute read

Jun 14

Are you in the market for a new home? If so, you may be debating whether to buy a property with solar panels. Solar panels on homes are more common in Canada than you might think — and they’re only growing in popularity. But if you’ve never had a home with solar panels before, then you probably have a few questions. Below, we delve into all things solar panels, including their benefits, owned vs. leased panels, and a few questions to ask before making an offer on a home that uses a solar power system. 

Solar Power System for Homes

First thing’s first, what is solar power? Solar power works by harnessing radiant light and heat from the sun to generate electricity. Solar panels are devices specifically designed to absorb the sun’s rays and convert them into electricity. The panels are made up of photovoltaic (PV) cells, also known as solar cells. When the sun shines on the solar panels, energy from the sun is absorbed by the PV cells in the panel. This energy generates electrical charges that move in response to the cell’s internal electrical field, thereby causing energy to flow.

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Homes in Canada typically require anywhere between 10 and 24 solar panels to cover their entire electricity usage. If you’re curious about how many solar panels a specific home requires, there is a formula you can use to figure it out. First, you will need to know your home’s annual electricity usage, the wattage of the solar panels, and the solar power system’s production ratio (the estimated energy output of the system over time). From there, you divide the system size by the production ratio by the panel wattage. The result of this division formula is the number of panels required to effectively power your home. Other factors that may determine how many solar panels a home needs are geographic location, panel efficiency, your personal energy consumption habits, and the panel-rated power. 

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At the end of the day, since solar power is derived from the sun, it is, in essence, a free energy source. That said, the cost of the panels themselves, along with the other necessary equipment (inverters, racking, labour for installation, and more) is not free. For this reason, the cost advantages of investing in a solar power system for your home are best visible in the long term. In addition, the number of solar panels installed on a home directly impacts the price paid for solar power (the more panels you install and the longer you use them, the greater your return on investment will be). For this reason, if you’re buying a home with solar panels already installed, you will have saved a significant amount of money, allowing you to see an even quicker return on investment.

“Solar power works by harnessing radiant light and heat from the sun to generate electricity. Solar panels are devices specifically designed to absorb the sun’s rays and convert them into electricity.”

Owned vs. leased solar panels

Solar panels are available for lease or purchase in Canada. Therefore, when buying a home with solar panels, it’s crucial to find out whether the existing panels on the home were purchased by the current homeowners (or a past homeowner) or are leased. 

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If leased, panels are typically leased for the long-term from a solar installation company. Leased solar panels have an average lifespan of 10 to 20 years. In some circumstances, the new homeowner would have the option of buying the panels from the installation company or incorporating their purchase into the sale price of the home. However, both of these options can be expensive. Should you choose to continue leasing the panels, keep in mind that some solar panel lease agreements include increasing payments over time, which may not be financially viable. Therefore, if you are considering buying a home with leased solar panels, ask for a copy of the lease agreement to carefully review so you understand exactly what you’re getting yourself into.

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On the other hand, owned solar panels are those the homeowner has purchased outright. Therefore, if you’re buying a home with solar panels, you will own the solar panels as soon as the sale is closed. In such a situation, the homebuyers shouldn’t have to pay anything for the solar panels when purchasing the home.

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Questions to ask before buying a home with solar panels

Since homes with solar panels are a little different from those with other, more traditional energy sources, it’s important to ask the seller or their realtor several questions before making an offer. We recommend asking the following questions relating to the home’s solar power system:

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  • Who owns the solar panels? Note that purchasing a home with leased solar panels may come at a high price. Ideally, you want to find a home with owned solar panels so that you won’t have to pay anything extra for them when you purchase the home. Plus, when you buy the home, ownership of the panels transfers to you.
  • Who made the solar panels? There is a wide range of companies producing solar panels on the market today. Ask for the name of the company so that you can do your research into its reputation. Plus, if the company is in Canada, the panels may come with beneficial warranties.
  • Who installed the solar panels on the home and when were they installed? Just like how the quality of the panels varies by provider, so too does the quality of installation. Therefore, we recommend asking for the name of the company or independent contractor that installed the solar panels on the property. Most solar installation companies offer warranties (typically no less than 10 years) on their workmanship. Should any issues arise within a decade of installation, you’ll be covered. However, you will only be covered if you know who installed the panels and the exact details of the warranty agreement.
  • How extensive is the solar power system? The size of the system directly correlates to its functionality and efficacy. In turn, this impacts the cost of your utility bills. If you feel comfortable, consider asking the seller how much the solar panels have affected their monthly energy bills. You may even ask how much money they estimate they’ve saved in utilities since installing the panels.
  • How many panels are installed and what are the wattages of the panels? As mentioned above, the number of panels and the panel wattages directly relate to their efficacy as an energy source. Though you might be able to count the panels just by looking at the roof, it’s smart to confirm the exact number of panels and their corresponding wattage. From there, you can use the formula listed above to calculate the ideal number of panels on the house. This way, you will know before you buy the home whether it currently has enough panels to power the house or whether more panels might be required in the future.
  • Is net metering possible? Depending on where the house is located in Canada, the solar panels might be eligible for net metering. Net metering could allow you to sell any excess electricity the panels generate back to the grid. In Canada, all provinces and territories offer a net metering or grid-tie power buyback program when homes generate their own electricity using a renewable energy source. Depending on the number of solar panels on your home, this could be an option for you, one that could not only help you save money but make money off your solar power system.

Why Install Solar Panels on Your Home?

The top five benefits of installing solar panels on your home are as follows:

Solar panels can reduce the cost of utility bills

One of the top reasons Canadian homeowners choose to install solar panels on their homes is to save money on utility bills. When you power your home using solar panels, you will significantly reduce your energy consumption. You might even be able to entirely eliminate your energy bills. While the upfront cost of solar power installation can seem daunting, the long-term savings on your utility bills are a huge benefit.

Solar panels are a reliable energy source

When your home uses solar energy, you no longer need to rely on traditional sources of power for electricity. In essence, you create your own personal energy source. And even better, it’s a renewable energy source, which is especially important in a world where non-renewable energy sources (coal, natural gas, and oil) are quickly being depleted. As long as the sun is shining, your house will have energy, making solar power a far more reliable and sustainable energy source than any non-renewable alternative. Therefore, solar panels can provide Canadian homeowners with unparalleled peace of mind knowing that their energy source will never run out.

Solar panels are better for the environment

Reduce your carbon footprint while saving money on utility bills thanks to solar panels. Solar power is a much more environmentally friendly energy source than traditional, non-renewable sources like natural gas or oil. In fact, it is these non-renewable energy sources that are responsible for the build-up of greenhouse gasses and air and water pollution. It’s also worth noting that, as the name implies, they are non-renewable, meaning they are finite and the planet is quickly running out of them. Thus, there’s no better time to invest in solar energy for your home. Installing solar panels is one step you can take to reduce your carbon footprint and save the environment.

Solar panels are low maintenance

Another benefit of solar panels is that they are incredibly easy to maintain. They are durable and can last up to 30 years. They typically only require maintenance every few years, and this maintenance is relatively simple. All you need to do is wash off dust, dirt, or snow from the panels so that they can function at maximum capacity. You can also hire a professional to clean the panels for you.

Solar panels can increase the value of your home

Lastly, did you know that solar panels can boost the property value of your home? It’s true! Should you decide to put your new home up for sale down the road, you may be able to sell it for a higher price thanks to the addition of solar panels. Energy-efficient upgrades are becoming increasingly attractive to homebuyers, and there are few updates more energy-efficient than solar panels. Even better, since solar energy is becoming more popular as we run out of non-renewable energy sources, it’s likely that the value of homes with solar panels will only go up.

Frequently Asked Questions

What happens when you buy a house with solar panels?

This depends on whether the solar panels are owned or leased. If the solar panels were bought outright by the previous homeowners, then ownership of the panels transfers to you when you buy the home. However, if the solar panels are leased, then you will have options ranging from buying the panels from the solar installation company to continuing with the lease.  

Are solar panels worth it in Ontario?

To determine whether solar panels are worth it in Ontario, you will need to consider the upfront cost of installation with how long it will take to pay off the system. Generally speaking, if you can pay off the solar power system within a decade, it’s worth it. Alternatively, if you’re buying a home with solar panels already installed (meaning there are no upfront costs for you), then it’s almost always worth it. Plus, the cost of electricity in Ontario is among the highest in Canada, which is yet another reason that solar panels may be worthwhile to homeowners.

Can solar panels prevent me from getting a mortgage?

Solar panels may impact your mortgage if they are financed. However, if the solar panels on your home were purchased outright then they should have no effect on your ability to get a mortgage. When solar panels are financed it means the homeowners used a loan to purchase the necessary equipment. In such instances, the solar company will put a lien on the house. Many Canadian mortgage lenders refuse to finance a property with an existing lien. Therefore, in order to obtain a mortgage, the solar company will need to agree to temporarily lift the lien until after the home is sold.

Does homeowners insurance go up with solar panels?

There is a chance that your homeowner’s insurance policy will go up with the addition of solar panels, but it’s not a guarantee. For this reason, we recommend getting quotes from several insurance providers to ensure you receive the most competitive rate. How solar panels can impact your insurance rate are as follows: Solar panels may add value to your home, which could increase the cost of your insurance policy (the more valuable a home, the more expensive it is to insure). However, the good news is that solar panels are usually covered by standard homeowners’ insurance policies. Since they are attached to your home, they are covered under the dwelling portion of your policy. (But keep in mind that you’ll only receive compensation from the insurance company if your solar panels are damaged by an insured peril, such as a fire.)

Is it worth installing solar panels in Ontario?

It can be worth it to install solar panels on a home in Ontario. Electricity rates are relatively high in Ontario compared to other provinces in Canada, which means that investing in solar panels can make a lot of financial sense. Given the province’s high cost of electricity, homeowners who install solar panels on their properties may see a return on investment in as little as 10 years. Plus, solar panels come with many other benefits, such as minimal maintenance (the only maintenance is clearing snow off them in the winter), a boost in property value, and a lesser environmental impact.

How much does it cost to install solar panels on a roof in Ontario?

The cost of installing solar panels on a roof in Ontario varies greatly depending on the wattage of the panels and the size of the home. In addition, some Ontario homeowners may wish to install enough panels to offset 100% of their electrical usage, while others may only wish to offset part of their usage. Generally speaking, you can expect solar panels to cost between $2.50 and $3 per watt. The average Ontario home requires a 7,500-watt solar array, which means the cost of installation would be between $18,750 and $22,500.

Emily Southey

Wahi writer

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