By Timothy L. Coyle.
Turning a deaf ear to the new housing costs its decision would generate, a state panel recently ruled that beginning in 2020 all new homes built in California must include solar rooftops. The action by the five-member California Energy Commission (CEC) makes good on a decades-long threat that the mandate was coming.
But, is this mandate as good as we can get? Especially given the exorbitant cost of putting solar on every new house?
Estimates are that new solar systems cost anywhere from $10,000 to $50,000 per home. According to the CEC directive, the total cost will be absorbed by state homebuilders – which surely means it will be passed on to consumers, already suffering from housing-price sticker shock.
Indeed, the mandate comes at a time when homebuyers in California are anguishing over the question of how much they can they afford to buy. Home prices in most California markets are well past the reach of typical households who want to live there. The solar mandate is just another example of the state forcing housing consumers to do more (become “energy efficient”) with less (income to buy).
It’s understandable that CEC commissioners took their action. California law requires at least 50 percent of the state’s electricity to come from non-carbon-producing sources by 2030. Solar power is easy to install and, therefore, has become increasingly popular and a driver in the growth of the state’s alternative energy production. But, it costs an arm and a leg.
The true-believers who promoted the CEC vote – as well as the panel’s five appointed commissioners – argue that the acknowledged additional cost of solar will be all but invisible. “Any additional amount in the mortgage is more than offset (by energy savings),” said Commissioner Andrew McAllister. “It’s good for the customer.”
Tell that to the loan officer who’s trying to qualify you for a new home loan. The lender is just looking for the additional money to pay for extras. According to the CEC, for residential homeowners, solar rooftops will add about $40 to an average monthly payment, but save consumers $80 on monthly heating, cooling and lighting bills. Keep in mind, that’s an offset – not new cash.
If you believe that, as the solar advocates are saying, then at some point we don’t need utilities, right? Or, are new rate hikes on the way? Those things should have been considered before approving the solar mandate. Moreover, did the CEC explore to what extent is putting solar atop all those vacant rooftops covering the state’s ample commercial space? Correspondingly, why couldn’t those commercial facilities rent out their rooftops for housing the solar panels?
Indeed, doing that completes the economic circle: power is generated using solar as the preferred alternative energy source, rent goes to those who space is being utilized and utilities recoup their expenses – including the capital costs associated with system installation – through rate-payer income.
If fact, in a way the CEC mandate already contemplates this. As I understand it, builders may choose the approach they can take to implement the new requirement: 1) make individual homes available with solar panels, or 2) build a shared solar-power system serving a group of homes. In the case of rooftop panels on single-family homes, they can either be owned outright and rolled into the home price, or made available for lease on a monthly basis.
In today’s super-hot real estate market, putting solar on commercial and not on residential rooftops makes sense. Why homebuilders didn’t argue for this, I don’t know. Maybe they consider solar energy is an economic plus for homebuyers. Maybe it’s the extension of the federal credit available to solar system consumers. Maybe it’s the mandate’s delayed implementation they were able to get. Or, that for the industry’s principal trade group – the California Building Industry Association (CBIA), which has been doggedly working with the CEC for the past few years – it was just good defense.
The bottom line is that California can become more energy-efficient without laying the cost at the feet of new homebuyers. That’s the policy we all should be working toward.