Starting January 1, 2020, all new single-family homes in California, as well as multi-family residences with three stories or less, will be required to install solar panels or participate in a community solar program. The solar mandate, which will be implemented as part of the 2019 Building Energy Efficiency Standards, was crafted by the California Energy Commission in collaboration with stakeholders from the solar and homebuilding industries, according to Energy Commissioner Andrew McAllister.
The solar requirement for new buildings is one part of the state’s plan to achieve “zero-net-energy,” an effort that was started in 2007 and aims to implement a set of standards that will result in all residential buildings generating as much power as they use with the help of renewable energy. “Back in 2007, that was a tall mountain,” McAllister remembered. “Solar was relatively expensive back then, so it was really a market transformation approach that California embarked on.”
Since then, the solar market has grown significantly, making solar a much more viable power supply option for consumers, according to McAllister. “There’s been a ton of innovation in the private sector,” the commissioner said. “The solar system that’s required under the code has benefits that far outweigh the costs for the homeowner.”
The mandate doesn’t apply to existing residential buildings, but McAllister is confident that the solar market in California has become competitive enough that market incentives will compel property owners to retrofit. “The kind of central power plant, one-way flow of electricity is an outdated model for the electric system,” he said. In comparison to a new, solar-equipped home, “that identical home without solar will actually cost more to operate,” McAllister pointed out.
Despite the long-term cost benefits of solar energy, Scott Choppin, president of real estate development firm Urban Pacific, is concerned about the short-term impact the added upfront cost of installing solar may have on the development of new housing for medium-income, working class families. “It continues to increase the cost to produce housing overall,” Choppin pointed out. “Every time costs increase, it means that fewer projects get produced.”
Developers, Choppin said, will pass on the cost to their renters. He added that educating new tenants about the long-term cost benefits of solar will be a challenge. “It’ll be up to the marketplace to communicate and educate buyers and renters,” he projected.
In the tight housing market of Southern California, some landlords may use the promise of energy cost savings to justify inflated rents, Choppin worried. “How much a particular tenant is going to save in electricity is hard to calculate, because every tenant uses electricity differently,” Choppin said, noting that unrealistic promises may cause renters to face a sticker shock down the line.
Instead of adding solar panels to their own building, residential developers can also opt to subscribe to a community solar source. “Today, there’s not much of a community solar market in California, but we think that the Energy Commission’s new standard will help spur the development of that community solar market,” Sean Gallagher, vice president of state affairs of the Solar Energies Industry Association, projected. “You’re going to see an increase in solar installations and [the business community] should be prepared for that, investors in particular should be prepared for that.”
Jarrod Osborne, general manager of Long Beach-based Solar Source, said he will be working closely with architects, developers, contractors and prospective homeowners to help them comply with the new regulations. “With solar being mandated as part of new construction, we just see those relationships growing stronger and really reaching out to new contractors and developers that we haven’t done business with yet,” Osborne said. “We’re looking at this hoping that it does create more community interest and community involvement in these projects.”