California Will Require Solar for New Homes

California just took a major step forward in their renewable energy effort by becoming the first state in the US to require new homes and major residential installations to include solar panels.

These measures were adopted on Wednesday, May 9, by the California Energy Commission (CEC). The new rules are set to take effect in 2020 and are poised to be a “very bold and visionary step” towards California’s 2030 goal of generating 50% of their state energy from renewable sources.

An obvious benefit of these new rules is that it will result in significantly more residential solar panel installations in California.

California is already the leader in solar installations and is continuously setting the bar higher and higher for other states in the US. Hopefully, this will influence other states to follow suit.

On the other hand, this requirement would also make the cost of a new home or major home installment go up by $8,000-$12,000. Housing is already quite expensive in California, with the median home value at $537,315, so this measure would appear to not be helping with that issue.

There are many long-term benefits however, that come with owning a solar panel system, including significant energy cost savings over time.

To get a more accurate picture of the value that you can gain, you have to look at the pros and cons in detail.

Policy Details

The new rules regarding residential solar installations are part of California’s Building Energy Efficiency Standards, which are a set of standards that focus on electricity and natural gas conservation and renewable energy generation measures. The recent updates are focused only on new homes and major home renovations that occur on or after January 1, 2020, and is also only applicable to homes under 3 stories.

The size of the solar panel systems that must be added to these homes must be equal to or greater than the home’s annual electricity consumption. This is determined by a set equation within the code itself. According to the Solar Energy Industries Association (SEIA), the average size for all of California’s regions would be 3.38 kW.

Because the size of the solar panel system is dependent on the home, the exact amount that would be added to the cost of a home is also dependent on this. An official analysis determined that for a single-family residential home the required solar panel system would add $9,500 to the cost, which can be paid through increased mortgage payment.

All said and done, the California Energy Commission projects that this will add around $40 each month to a 30-year mortgage payment while saving an average of $80 on electricity expenses per month.

Long-Term Benefits

After a proper analysis, it is easy to see how the long-term savings from your solar panel system will outweigh its added cost to your home. Based on the CEC’s estimation of a net $40 in savings each month, the amount of savings would be $14,400. Other calculations show even greater savings, which can easily amount closer to $20,000.

If you are paying for the solar panel system upfront, then your net savings each month on electricity will be $80-$100.

Outside of the individual savings from a solar panel system, there will also be collective benefits to the state of California as a whole. The SEIA also found through their analysis that this new measure would lead to an additional 200 megawatts of solar installed in the state annually.

These new rules regarding solar installations are a way to normalize solar to the point where when an individual thinks about building a new home, a solar panel system will be just as normal as a bathroom or front door. Homeowners of existing homes without solar will also be more familiarized with solar when they see the systems on the new homes of their friends and colleague.

Solar Going Mainstream

Overall, what we are seeing here is yet another leap forward in bringing solar technology into the hands of the average consumer. As solar becomes more affordable each year and investments in solar continue to grow, we will likely see more measures like those adopted by states throughout the country.

California’s requirement for solar installations on new homes is a huge step in this direction. If you want to learn more about getting started on a solar project, check out what our Energy Advisors can do for you!