California mandates solar panels on all new homes by 2020

Right now, about one in five new homes in California comes with solar panels already installed. In two years, it will be all of them.

On Wednesday, California Energy Commission's vote was unanimous: California will soon become the first state to require solar panels on all new homes and on residential buildings smaller than four stories.

The law, which takes effect Jan. 1, 2020, specifies the minimum size of the system would be based on the size of the building and can vary between 2 and 7 kilowatts of output per dwelling. 

The director of the non-profit Environment California Dan Jacobson calls it a massive win for the state.

"It means we no longer have to decide between lighting our homes and destroying the environment," Jacobson says.

Moments after the new rules were passed, Jacobson walked down a street in downtown Los Angeles, pointing at the bare roofs of downtown L.A., imagining a city gleaming with solar panels.

"On an average day like today, California will use about 25,000 megawatts of electricity in order to generate our power, and by putting on these solar panels [we] will be able to offset about 30 to 40 per cent of that."

Energy bills down, housing costs up

The California Energy Commission says new homeowners can expect to see their energy bills fall more than their mortgage will rise. The CEC estimates the cost of solar will boost the price of an average house by $9,500. Mortgages will increase on average by $40 a month, but homeowners will save $80 on monthly utility bills, it says.

The California Building Industry Association supports the changes to the state's code, but senior engineer Bob Raymer warns the cost will be passed on to buyers. That could put the cost of homes out of reach for some.

"With each $1,000 cost increase in California, our National Association of Home Builders estimates that we're knocking about 14,000 potential buyers out of the market," Raymer says.

Already a housing deficit

And some fear that could exacerbate an ever-worsening housing crisis.

In terms of total housing units per capita, California ranks second-last in the U.S.

"We've now developed what we call a housing deficit of 1.3 million units, that's why housing prices in California are skyrocketing," Raymer says. He estimates the industry will build 115,000-120,000 homes in 2018.

According to the National Association of Realtors, the 2017 median home price in California was $389,000, third-highest in the U.S.

Richard Green, director of the USC Lusk Centre for Real Estate, says tacking $10,000 onto already prohibitive housing prices won't help.

"I think mandates tend to be bad policy," Green says. "If you make it more expensive to buy a new house, then rich people stay in old houses and you don't free up the old houses for other people and so you continue to make those houses more expensive."

And the cost of going solar could go up even further.

Tariffs on imported solar panels

In February, the 30 per cent tariff on imported solar panels that President Trump imposed took effect. That's expected to dampen demand for residential solar installations, which in California had declined in the first three quarters of 2017 by 23 per cent compared to 2016.

However Jacobson hopes California's new rules could help the industry rebound. Almost 16 per cent of the state's electricity comes from solar energy, and the industry employs more than 86,000 workers.

If California can successfully implement the new rules, Jacobson expects more than a dozen other states will follow suit, independent of shifts in federal policy.

"The good news is that even if the president wants to move us backwards, states — not only California but all over the country — will continue to move us forward when it comes to clean energy."