For some time now, the expansion of renewable energy sources (e.g., hydroelectricity, wind power and solar energy) has been a priority for policymakers in California. Over the last few years, this subject has been an occasional focus of attention of this blog, in particular with regard to solar electricity leases. In the wake of recent action by California regulators, however, the solar lease may become a relic of the past, and we may be entering a brave new world of solar energy.
Earlier this month, the California Energy Commission adopted several building energy efficiency standards for new residential construction effective as of January 1, 2020, including a first-in-the-nation directive that solar electricity systems be installed on all new home construction, including single family houses and apartment buildings of less than three stories. The Commission, which is the state agency charged under the Warren-Alquist Act with setting statewide sustainable energy production and conservation policies, had spent the last 18 months developing these new regulations as a part of a series of changes to building codes geared towards lowering energy consumption and costs and increasing production of nonpolluting energy to support the state’s electrical grid. In addition to calling for solar electrical systems, these rules also set forth other provisions intended to reduce heat loss from buildings, improve indoor air quality, and lower energy consumption for indoor lighting.
A number of cities in California have already established mandates for solar photovoltaic power systems in their jurisdictions. For example, San Francisco and Fremont have adopted regulations to incorporate solar panel systems in all new single-family and multifamily homes. Further, in late 2016, Fremont also required that new residential and commercial developments be “EV ready.” This rule means that most new single-family homes must have a large specialized outlet and a dedicated circuit in the garage so a resident can plug in an electric vehicle charger, according to Rachel DiFranco, sustainability manager for the City of Fremont.
California’s new solar power rules are expected to increase building costs in the state, although the addition of rooftop solar systems at the time of initial construction may be the most cost-efficient approach to expanding solar electric use. With initial solar panel installation costs of $14,000 to $16,000, the total cost of full compliance with these regulations could be as high as $30,000 in extra up-front expense when the costs imposed under the new standards for more efficient windows, appliances, and insulation are added in. Still, however, according to C.R. Herro, vice president of environmental affairs for Meritage Homes, owners should be able to recoup as much as $50,000 to $60,000 or more in cost savings over the lifetime of such systems.
These new regulations will likely have a significant impact on the number of solar installations in California. Currently, California averages about 80,000 new home starts each year; of that total, about 15,000 of those are being built with solar. As reported in the New York Times, these new regulations will increase the number of solar systems by 44%. According to industry sources, however, the impact of these new standards will not be limited to new construction. As solar electricity systems become common on new construction, owners of homes that were built before 2020 who seek to better market their properties may begin to add such systems to their homes as well, as may homeowners and builders in other states that enjoy substantial amounts of sunshine, such as Arizona and Hawaii.
As I think about the heightened expectations regarding these solar energy developments among many in government and industry, I’m reminded of a line from an ‘80s song: “The future’s so bright, I gotta wear shades.” Sung ironically about the prospects of nuclear war in that era, this sentiment seems particularly apt here: While there are those who see nothing but positive outcomes as a result of these new regulations, I can’t help but have concern that these well-intended actions may ultimately produce unintended negative results. As with most such questions, only time will tell.
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