California just became the first state to require all new construction, starting in 2020, to be solar powered. The new standards apply to new residential single-family buildings and multifamily buildings up to three stories high. The solar power can either be supplied by a new structure’s own set of solar panels, or buy a shared solar-power system serving a group of homes.
The formalization of this mandate into the CA Building Code has elicited mixed reactions from politicians, builders, developers, and those in the real estate industry. Some argue that the cost to build new housing will increase, disincentivizing developers and would-be homebuilders in a time when the state is in need of more housing. Others point out that solar panels save homeowners money on utility bills in the long run, off-setting these costs over the 30 year lifespan of the solar panels. Even so, increasing housing-costs in such an unaffordable housing market may have a negative impact on homeownership.
What this Means for Homeowners and Buyers
Because this law only applies to new buildings, homeowners will not be required to install photovoltaic panels. However, as more solar-powered homes come on the market, homeowners may notice an increase in the emphasis given to sustainable features in homes, and may see an increase in return when installing energy-saving features.
Homebuyers will likely see an increase in the price to purchase a new home, though will save on energy bills, and over the long-run, may come out net-positive or neutral. According to the California Energy Commission (CEC), buyers of new homes on average would see monthly mortgage payments rise by $40, while their monthly utility bills would decline by $80. They estimate that, on average, the 2019 standards will increase the cost of constructing a new home by about $9,500 but will save $19,000 in energy and maintenance costs over 30 years. Some options will alter those numbers like whether a buyers opts to lease or buy the solar panels.
If you are considering buying real estate in the next few years, it is more important than ever to understand the nuisances of owning a home with solar panels. If you’d like to learn more, take a look at this article.
The California government has been working on a “Net Zero 2020” action plan for years. Earlier in the planning-phase, officials stipulated that net-zero homes should offset both natural gas and electricity. With the officiation of this mandate, this goal is relaxed a bit, and homes will only be required to offset electricity. However, the state is pushing to reduce gas consumption over time and facilitate a shift to high-efficiency electric appliances, such as heat pump water heaters.
Read more about the mandate approval process, as well as supporting and opposing views in this article.
Infograph – California’s 2019 Residential Building Energy Efficiency Standards