How California’s New Solar Mandate Will Affect Homeowners

In 2018, the California Building Standards Commission approved a mandate requiring all new homes under three stories in the state of California to install solar panels. This solar roof mandate, which is the first of its kind in the United States, will go into effect on January 1, 2020.

While this new mandate enables groundbreaking advancement of clean energy, incentivizes energy storage, and promotes a variety of home energy efficiency upgrades that will collectively reduce energy use in new homes by more than 50 percent, there are various solar system requirements, flexibility measures, deployment and financing options, costs, building process provisions, maintenance responsibilities, and energy savings estimates within the updated building code that California homeowners should be aware of and understand.

System Requirements
California’s solar roof mandate is applicable to new residential buildings three stories tall and under and states that the solar PV system must be large enough to net out the annual energy usage of the home in kilowatt-hours. This means that, depending on their location within the state and their house’s energy efficiency, the average California homeowner should expect their solar energy system to be sized between approximately 2.7 and 5.7 kilowatts.
In addition to solar, the mandate encourages but does not currently require the deployment of technologies such as battery storage and heat pump water heaters in newly built homes.

Flexibility Measures
A number of flexibility measures are included in California’s solar roof mandate, including the option for builders to deploy community solar rather than rooftop solar for new homes so long as they receive approval from the California Energy Commission and coordinate with the local utility. Although pursuing community solar for large-scale projects reduces labor costs for builders, it may not be the most beneficial option for homeowners from a cost perspective; currently, California’s regulations prevent homeowners from taking advantage of net metering while in a community solar arrangement. Another flexibility measure built into the code allows potential exemptions from the mandate for homes where electricity rates are lower than the cost of solar power or where the roof cannot sustain solar panels due to shading or other reasons.

Solar Deployment and Financing
Under the mandate, home builders have options in terms of how they go about outfitting each new house with solar. As mentioned above, builders do have the ability to pursue community solar rather than rooftop solar for residential buildings. However, builders who choose to go the rooftop route have multiple courses of action that they may take within that sector as well.

One option is for builders to request bids from and outsource projects to general contractors and solar companies such as SunPower. Under this scenario, the builder could either allow the project to be rolled into the overall price of the home and paid for through the mortgage or permit homeowners to pay for the system upfront in cash, obtain a loan to pay for the system, or sign into a lease.
Another option is for builders to bring the solar process in-house and create their own solar division within the company. Financing options for homeowners would likely be similar to those available for outsourced projects.

Costs
According to the California Energy Commission’s research and calculations, the cost that homeowners should expect to incur in order to add solar panels to their new home ranges from $8,000 to $18,000 depending on the location within the state. This cost is before available California solar incentives and includes the solar PV modules, inverter, structural balance of the system, electrical balance of the system, supply chain costs, sales tax, install labor, permitting, inspection, interconnection, customer acquisition, general and administrative overhead, and net profit to the installer.
If the cost of the solar energy system is rolled into the overall price of the home, these CEC estimates suggest that the addition of a solar system will increase the average homeowner’s monthly mortgage payment by approximately $40.

Building Process
Under the solar roof mandate, the construction process of new homes is not expected to undergo significant changes other than the addition of a solar energy system. However, the mandate does include a few updates to green home building standards that builders must comply with to improve the comfort and energy efficiency of the home. These provisions include thicker attic and wall insulation, energy efficient windows and doors, and improved ventilation systems. For homeowners, the implementation of these provisions will ultimately increase energy savings.

Maintenance
One addition to the new building code requires that homeowners have the ability to receive regular insight and feedback on how their solar energy system is performing. Whether it’s through a mobile app or an online dashboard, homeowners will be able to see how their solar panels are operating and diagnose any potential issues or deficiencies.

In terms of regular solar system maintenance and upkeep, the party responsible will ultimately depend on the homeowner’s financial arrangement. If the homeowner selected a lease, the leaser will typically perform periodic maintenance for the life of the contract. Under a lease, the leaser generally assumes responsibility for fixing any system issues that may be incurred as well.

On the other hand, if the homeowner chose to pay for their solar energy system through their mortgage, cash, or a loan, they may assume responsibility for system upkeep if their contractor does not include maintenance as a regular part of the service. In order to keep the system running optimally, this may include periodically cleaning the panels, frequently monitoring system production, and notifying and working with the service provider to remedy and resolve any system problems that may be incurred.

Energy Savings
According to calculations from the California Energy Commission, the addition of a solar energy system to a new home will save the average homeowner approximately $19,000 in energy and maintenance costs over 30 years. While the CEC estimates that solar will add around $40 per month to the mortgage for an average home, it also estimates that solar will save homeowners about $80 per month on heating, cooling, and electric bills.

For Further Reading:
Resources for further research into The California Solar Mandate include:
• “Starting in 2020 All New California Homes Must Come with Solar Panels”: https://www.latimes.com/business/realestate/hot-property/la-fi-solar-mandate-20181214-story.html.
• “An Overview of the California Energy Mandate”, https://news.energysage.com/an-overview-of-the-california-solar-mandate/

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