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California will require most new homes to have rooftop solar panels starting in 2020 — and Coachella Valley residents could save more money than anyone else in the state.
On average, California home buyers are expected to save nearly $10,000 from the solar mandate and other new energy-efficiency rules. New home prices are estimated to rise by about $9,500, but utility bills are estimated to fall by $19,000 over the 30-year lifetime of the typical solar installation, according to an analysis released by the California Energy Commission, which approved the new rules in a unanimous vote last week.
That comes out to roughly $40 in monthly savings, with electricity payments falling by $80 and mortgage payments rising by $40.
But in the Coachella Valley, where summer heat drives high electricity use, rooftop solar generally leads to bigger savings than it does elsewhere. Desert homeowners who buy electricity from Southern California Edison could save more than $17,000 in the long run from the solar mandate, or $74 per month.
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Those numbers come from a report conducted for the state by Energy + Environmental Economics, a San Francisco-based consulting firm. Because the mandate will require larger installations in areas with higher electricity use, the firm estimated that the average home price in the California climate zone that includes the Coachella Valley and Imperial County would rise by nearly $16,500 once the solar mandate takes effect in 2020. But desert homeowners can expect to save nearly $34,000 over a 30-year period from being able to generate their own electricity, the consulting firm found.
For critics, including some home builders, the solar mandate is yet another burdensome regulation that will drive up the cost of housing in a state already facing an affordability crisis. But solar advocates believe the long-term savings more than make up for the up-front costs. Even if prospective home buyers have to take out a slightly larger loan, solar advocates say, they’ll immediately start to see savings in the form of lower utility bills.
“Here in the Coachella Valley, we already have a lot of builders and developers going that direction on their own because the public asks for it,” said Nate Otto, a former home builder who now runs Hot Purple Energy, a rooftop solar installer based in Palm Springs. “The people who are buying homes, they want (solar), and they ask for it.”
The solar mandate will probably be less cost-effective for eastern Coachella Valley served by the Imperial Irrigation Irrigation District than it will be for Edison customers. The publicly owned utility offers far lower electricity rates than Edison, meaning there’s less money to be saved by going solar. IID also provides less compensation to homes and businesses for the solar energy they contribute to the grid than Edison does.
California is the first U.S. state to make solar panels the standard for new homes. The new rules are part of the state’s efforts to fight climate change by reducing greenhouse gas emissions from the burning of fossil fuels. They also continue a long history of California requiring more efficient buildings and appliances. While per-capita electricity use has risen dramatically across the rest of the country since the 1970s, it has remained flat in the Golden State, saving Californians billions of dollars in energy costs.
The new solar mandate will lead to a 14 percent increase in solar installations on single-family homes from 2020 through 2023, according to projections from GTM Research, a clean-tech consulting firm. In addition to reducing energy bills and climate pollution, the bump in installations could keep solar jobs in the state that may otherwise disappear. The solar industry employed 86,000 people in California last year, according to the nonprofit Solar Foundation, but some of those jobs could be lost as a federal tax credit winds down and as the Trump administration’s import tax on solar panels kicks into gear.
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The new rules from the California Energy Commission will require solar on single-family homes and multifamily buildings up to three stories, with an exception for buildings that don’t have enough unshaded roof space. The energy commission also adopted stricter efficiency standards for insulation and windows that, combined with the solar mandate, are expected to reduce energy use from new homes by more than 50 percent.
“Everyone looks to us to be the progressive,” said Vincent Battaglia, chief executive of Renova Energy, the Coachella Valley’s largest rooftop solar installer. “It sends a message much further than California that solar will ultimately be integrated and mandated in all new construction in the United States going forward.”
At the same time, the state’s solar requirement won’t exactly be a sea change in the Coachella Valley, because rooftop panels are already so popular here.
Fred Bell, president of the Desert Valleys Builders Association, estimated that 60 to 70 percent of new homes being built in the Coachella Valley already have solar on them. Partly that’s because of the region’s year-round sunlight and high electricity bills, which make rooftop solar particularly compelling for homeowners here. And partly it’s because builders have been preparing for the state mandate for several years, Bell said.
“We knew it was coming,” he said.
Bell is the chief operating officer of Nobell Energy Solutions, a company that installs solar panels on commercial and industrial properties. But even though he comes from the solar industry, he called the state’s new mandate “a double-edged sword.”
On the one hand, Bell said, homeowners will save money in the long run, especially in the Coachella Valley. But on the other hand, home prices will go up, making it harder for some families to qualify for loans. The state estimates average home prices will rise by $9,500 because of the new rules, but Bell suspects the increase could be double that.
“My only concern out of all of this is raising the bar for already strapped families trying to get into entry level housing at the $275,000 to $300,000 threshold,” Bell said.
“I don’t want to use that straw man argument to say we shouldn’t do (solar),” he added. “But there are problems with affordability, and they’re clearly evident.”
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Developer Dennis Cunningham, who heads Palm Springs Modern Homes, also has a nuanced perspective on the solar requirement.
Cunningham is building a 64-unit home development just north of the Riviera hotel on Indian Canyon Drive. He contracted with Hot Purple Energy to install solar panels on every building in the development, even though the state requirement doesn’t take effect until 2020, because he figured many occupants would want solar anyway. With 64 units spread across eight buildings, he didn’t want to deal with residents fighting over roof space or signing deals with different solar companies that could come into conflict.
Cunningham said the solar panels have added about $8,000 per unit to his cost of construction, although he hopes to get back about $2,000 per unit in rebates.
“Right now I’m absorbing it, and I hope that I make a profit,” he said.
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Cunningham said he’s frustrated by the many forces that drive up the cost of home construction, from state and local fees and building standards to lumber and steel tariffs from the federal government. He’s worried about the impact the solar mandate will have on his ability to build and sell homes that people can afford. But at the same time, he sees solar as a social good, unlike other factors that have made homes more expensive.
“Solar’s an interesting cat. Lumber prices going up because of a tariff war, that’s not necessary cozy feel-good environmental, that’s just business,” Cunningham said. “But when it comes to the solar, I think most of us know that it’s a good thing.”
Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.