Solar Works Blog

What Does the New Solar Mandate Mean for the Public?

May 22, 2018

By Ceylan Crow. The California Energy Commission (CEC) voted on May 9 2018, to further increase the clean energy requirements in the California Building Energy Standards. Updated every three years, the standards require California homes and businesses to meet strong energy efficiency measures, lowering their energy use.

For the first time, they will require solar photovoltaic (PV) panels to be installed on all new low-rise residential buildings starting January 1, 2020.

The new rules apply specifically to all new residences and major home renovations on buildings under three stories. In the event a building isn’t suitable for a rooftop array, the standards require homes have access to community solar or offset energy usage through additional efficiency gains, while some homes may be exempt. The regulations include exceptions for when solar panels aren’t cost-effective or feasible, such as on a home shrouded in shade. Community-shared solar generation equipment will also be an option in such cases.

What are the advantages for those who are planning to build new homes and for the general public?

The first and foremost advantage of the new solar mandate to the public, is Environmental. There’s a clear public interest in cleaning up our air and reducing our greenhouse gas emissions. Groups such as the Sierra Club and the Natural Resources Defense Fund have come out in favor of the updated code, saying it helps pave the way for greener homes.

“Because the grid is cleaner and residential rooftop solar
customer compensation for over generation is very limited, it
is critical that rooftop solar generation does not substantially
exceed the home’s electricity use. It is ideal to generate
the electricity and have it used onsite versus exporting it to
the grid at a time it may not be needed. When the rooftop
solar generation is entirely used to offset on-site electricity
consumption, then the home has virtually no impact on the
grid, reducing the home’s climate change emissions.” (1)

The second advantage of the mandate, concerning mainly those interested in building a home, is the savings on energy bills. On average, the new standards will increase the cost of constructing a new home by about $9,500 but will save $19,000 in energy and maintenance costs over 30 years, taking inflation into account. Based on a 30-year mortgage, the Energy Commission estimates that the standards will add about $40 per month for the average home mortgage, but save consumers $80 per month on heating, cooling and lighting bills, so the monthly savings are twice as high as the additional cost. Homeowners would be saving on average almost $500 a year because of the new mandate. Over time, such savings would more than make up for an increased down payment. The new standards will increase the cost of constructing an all electric new home by $22,000 (after the federal tax credit) but will save the homeowner $130,000 in energy costs over 30 years. Based on a 30-year mortgage, with a 4.75% interest rate, this would add $163/month to the home mortgage, but save the homeowner $273.50 per month on their electricity bill the first year. With savings increasing over time as utility rates increase.Over time, such savings would more than make up for an increased down payment.

For those who argue this mandate will bring housing prices up, it is known by now that factors of production that go into the cost of a house is land, labor, material and capital, land being the most expensive component. A requirement for PV solar installations on new homes “is a drop in the bucket” by comparison, Gary London, an economist and real estate analyst in San Diego commented. He emphasized the role of local zoning that limits how many homes can be built in highly sought-after neighborhoods.

Also, in California’s coastal communities, at least, research has found that the sharp rise in housing costs is mostly driven by rising land costs, said Issi Romem, chief economist at BuildZoom, a permit and contractor data analysis website.

The third advantage to the public is more control. The building-code change is another facet of a broader transition away from centralized power. As with the dissolution of the phone monopoly, which allowed customers to choose providers and shop for rates, changes in the way energy is delivered puts more control into the consumers’ hands. These goals have already been furthered with smart meters that help control consumption, along with a choice of electricity retailers in many places. Also with a combination of residential solar power and battery storage, homeowners can minimize their resort to the grid altogether.

The fourth advantage is the normalization of solar and renewable energy sources. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association noted in an interview that deploying solar as part of the home building process will normalize the technology for tens of thousands of families, in a positive way. The normalization of solar is important, there are 100,000 customers annually that will see the acquisition of solar as a normal part of their home transaction. You have a front door, you have an HVAC system and you get solar panels. Normalizing the solar experience makes it less risky to the consumer,

In conclusion, the new building mandate has 4 outstanding benefits for new home builders and the public; environmental, savings on energy bills, more control by the consumer through changes in the way energy is delivered and the normalization of solar energy as a viable source of home energy supply.

It is also important to note, there is plenty of other clean energy legislation being debated (or that’s already passed!) that does prioritize low-income communities.

Currently, the California Assembly is trying to amend its signature net metering bill, which would help connect residents’ energy systems to their utilities to sell and offset costs, so that more low-income communities can take advantage of
it. Some are suggesting community solar that would harness power on the roofs of local churches.

For specifics of the new California Building Energy Standards please see:

(1) 2018_Title_24_2019_Building_Standards_FAQ.pdf

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