California is taking big steps toward solarizing its housing industry. On Wednesday, the California Energy Commission voted unanimously to adopt a motion requiring solar panels on nearly all new homes built in the state starting in 2020.
According to an article in the Wall Street Journal, the California Building Standards Commission usually adopts the Energy Commission’s recommendations.
The motion still needs approval from the California Building Standards Commission to pass. Should it receive the Standards Commission’s stamp of approval, California will become the first state to require solar panel installation for new homes.
The regulation would apply to all new homes under three stories high, both traditional single-family and condo homes.
Despite having one of the most expensive housing markets in the U.S., homebuilders are largely in favor of the new energy efficiency measures and solar panel mandate.
According to the Wall Street Journal, the new measures would add $9,500 to the average cost of building a new home in California. The median home price for a single-family home is almost $565,000, according to the California Association of Realtors.
Realtor.com Chief Economist Danielle Hale explained the regulation could make affordable housing shortage even worse than it already is.
“Among the markets reviewed in April, homes with solar panels tended to have a lower median price per square foot than homes without the feature so while it may cost more to install the panels, sellers don't reap an obvious financial benefit in the form of a higher selling price. In a market where affordable new construction already lags demand, this mandate could exacerbate this imbalance by raising the price of low-density new construction. However, the existence of the mandate implementation may cause builders to hurry to complete projects before the mandate kicks in on January 1, 2020.”
As the WSJ article mentions, the upside for the California economy is that, in the event that this motion passes, California’s residential solar industry could see as much as a 15% boost as California’s low-rise housing inventory increases by about 2% every year.
“Today, California became the first state to require solar power installations on new homes. Perhaps unsurprisingly, eight of the top 10 metros featuring the most solar panels on actively listed homes are located in California, according to research from realtor.com. Their prevalence ranges from 2% to 6% of properties actively listed in April 2018,” Hale said. “The new mandate will push those figures higher.”