California became the nation’s first state to require solar panels on new homes. The California Energy Commission (CEC) made the ruling in May, and the Building Standards Commission’s unanimous vote made it official by declaring the CEC followed the correct process. The state claims it will reduce a new home’s energy usage by 50% and reduce greenhouse emissions by the equivalent of taking 115,000 cars off the road.
Whether or not you agree with the new standards, if you are in the market for a new home in the state, it behooves you to understand the costs and benefits to you.
The building standards
The new standard requiring builders to install solar photovoltaic (PV) panels starts in 2020. This applies to all new residential homes, including single family, co-ops, and condos, that are three stories or less. There are certain exemptions, such as homes in the shade or a small roof that cannot fit the solar panels, but this generally applies to all new residential construction for small rise buildings.
The CEC conducted an extensive three-year study. It discussed the potential impact with various stakeholders, including utilities, home builders, and solar panel manufacturers.
It concluded that the panels would increase the home’s cost by approximately $9,500, on average. However, some have disputed this figure. One estimate stated the actual upfront expense is more likely $14,000 to $16,000, although we note this comes from a home builder’s executive.
The commission pegs the net monthly benefit at $40 due to lower electricity bills. This is after the homeowner pays the $9,500 solar panel cost as part of the mortgage. While your mortgage payment goes up to $40 a month, this analysis states the energy savings are $80 per month.
Using these figures, the annual savings is $480. Assuming the $9,500 solar panel cost, you will pay off this amount after nearly 20 years, after which you reap the profit.
However, the actual amount you shave off your electricity bill varies based on a host of factors, including the price of energy and size of your home. There are online calculators that can help you figure out your savings.
It is also possible the cost comes down over time as solar panel manufacturers mass produce the product and enjoy greater economies of scale. There are currently 150,000 solar panels installed annually in California, according to the CEC. New home purchase accounts for approximately 10% of this total, but there are 80,000 homes built per year in the state. This means new homeowners require an additional 65,000 solar panels each year.
The new rules also include incentives for energy storage and energy efficiency options designed to give consumers more clean energy solutions. Using solar plus storage pairs the two and allows clean energy to work day and night. The aim is to cut a new home’s energy usage by at least 50%.
The large state’s push into solar energy will likely have significant ramifications for the entire clean energy industry which are going to reverberate across the nation.