By Mandy Ellis
With the recent passing of California’s statewide solar mandate, consumers may be unsure of how future home purchases will be affected. To help you understand the ups and downs of the new legislation, here are explanations on the mandate, pros and cons, and why it’s a good thing in the long run.
What is California’s solar mandate?
The new mandate requires solar systems of 2 to 3 kilowatts (kW) to be installed on all new homes, plus apartments and condos up to three stories high, starting January 1, 2020. Builders can attach the panels to each single-family home, or build a shared solar system that provides power to a group of homes.
As California averages about 80,000 new homes per year, according to the California Department of Housing and Community Development, this mandate impacts thousands of homebuyers looking into new construction.
“This has already been implemented in some municipalities for three years so the mandate just makes it statewide,” said Tim Broughton, energy specialist at Los Angeles, Calif.-based AWS Solar, “The system mandated isn’t going to cover 100 percent of energy needs of many homes, but it’ll make an impact.”
Pros of the solar mandate
One positive of the solar mandate is that consumers can secure a 30 percent tax credit by owning the system, the system is installed prior to move-in, home values increase, utility bills decrease by about 50 percent, carbon footprints and reliance on fossil fuels decline, and consumers skip the solar shopping experience. The system does raise the price of buying a home by an average $9,365, states the California Energy Commision, but savings hover around $19,000 over the course of 30 years.
“It gives consumers validation they’re purchasing a product that’ll be a long-lasting part of our society,” said Ruben Ugarte, senior director of business development at Horizon Solar Power in Temecula, Calif., “New homes look great with new flooring, granite countertops and top appliances, and if solar is included, it’s being put in that realm of things homeowners want when buying a new home.”
The solar mandate also relieves homeowners of the stresses of going solar, such as comparing prices and evaluating installers, he adds.
Cons of the solar mandate
The biggest issue is California’s housing market already has a low amount of inventory, particularly of affordable housing, and the mandate increases new home prices. Although there are savings over decades, the higher initial purchase price will put new home ownership out of reach for some potential buyers.
Additionally, Haim Vagas, CEO of ArtGreen Construction in Los Angeles, Calif., notes that homeowners have no choices in the installation process: “Customers don’t choose components, and can’t negotiate prices or products so developers can install whatever they want.”
Experts explain that lack of customer choice and developer flexibility are drawbacks plus if homebuilders install lower quality systems, customers won’t get as much from their solar. “I’m not sure if it’s in the mandate, but there should be a minimum performance guarantee of 80 percent energy production at year 25; par for the course for quality panels,” said Broughton, “Cheaper ones don’t reach that so their faster energy production degradation means consumers with minimum installation from the get-go will be looking to replace or supplement going forward.”
This disadvantage – that most mandated systems may be too small to power homes 100 percent – means homeowners who want to source all of their energy from solar have to have additional roof space and hire an install to add more panels, which could mean hefty fees.
“Developments installing near me are extremely small, six to eight panels, just to satisfy the law,” said Vagas, “Homeowners will want system expansion because the developer goes with minimum requirements, and we charge more money to expand systems because it’s not cost efficient for us, so the consumer is now paying more for solar.”
Meanwhile, homeowners who choose to lease panels at a more manageable cost will lose the 30 percent tax credit. “If the installer owns the system and leases it, the installer gets the credit; only the system owner gets the credit,” said David Yoo, founder and CEO of Pingo Solar in Buena Park, Calif. If the system price is $20,000, for example, the homeowner misses a tax credit of $6,000. Additionally, the Solar Energy Industries Association says the tax credit drops to 26 percent in 2020 and decreases until it hits zero in 2022, unless Congress renews it.
Why the solar mandate is good in the long run
Despite cons, the mandate is a positive push forward for renewable energy and the environment by reducing carbon footprints and pollution, improving air quality, diminishing reliance on power grids and providing homeowners lower-cost, green energy.
“Renewable energy is always preferable and it’s the direction most of the world is going,” said Broughton, “To rely on old technology that causes environmental damage is foolish; even countries like Saudi Arabia, one of the world’s biggest oil producers, is heavily investing in solar energy.”