New Solar Panel Requirements for California Homes

Industry Observer with LendingTree

The first Earth Day may have been celebrated nearly 50 years ago, but the idea of “Going Green” has grown in popularity in recent years. Individuals are embracing ways to be environmentally friendly by saying no to plastic straws, buying electric vehicles and opting into paperless statements. But environmentally conscious individuals are not the only ones looking for ways to leave a smaller carbon footprint. Businesses, educational organizations, and healthcare organizations have all begun to look for ways to go green. Most recently, the state of California joined the list by passing a mandate that requires all homes built after January 1, 2020 to install solar panels or a shared solar-power system that manages multiple dwellings.


The new requirement is a first for any state. According to Pew Research, more than 80,000 houses are built annually, and the mandated solar panels will more than double California’s solar energy in just five years. Adding solar panels may add more than $8,000 to the cost of building new homes. However, the California Energy Commission states homeowners will save more than that on the cost of energy bills, making it worth the investment.


How much homeowners will save depends on a few factors, including the number of hours the home is in direct sunlight, the size of the home, the amount of energy consumed, and the length of time they remain in the house. The energy commission predicts that homeowners will save $19,000 over 30 years in energy costs. However, this does not account for the increase in mortgage costs.


Solar Panel Concerns


Solar panels are a costly investment, and since they are outside of the home, they are susceptible to damage caused by environmental elements. Wind, severe rain, storms, and even animals are just a few things that could damage the panels. When damage occurs, it is the homeowner’s responsibility to repair or replace the solar panels. Since many homeowners don’t have $8,000 in savings to cover the costs, the new responsibility requires some preplanning.


Since solar panels are considered a permanent structure (just like a porch or garage), there is coverage on a homeowner’s insurance policy. The addition of solar panels increases the home’s value as well as the replacement costs in the event of a disaster, which could also cause a rise in insurance premiums. Homeowners should contact their insurance companies to confirm coverage and ensure it is adequate.  


The Future of the California Energy Commission Requirement


The new California Energy Commission requirement doesn’t just impact homeowners looking to build in 2020; it also affects current homeowners. One of the biggest arguments against the mandate is that moving new homes to solar power will increase energy costs for those still relying on the grid. This is because a portion of the current bills is used for fixed costs and ongoing grid maintenance, and with fewer homes to share in those costs, remaining homeowners will be responsible for the difference.


Any homeowners looking to build this year should weigh how the new law is likely to impact them. Factors to consider include how the change will increase the overall costs of building a new home. While expenses are estimated to be approximately $8,000, will builders increase their fees because of the new time involved, learning curve, and training costs associated with building houses in 2020 and after?


Anybody looking for a new home after January 1, 2020, may experience a shortage in available houses for sale because more individuals may want to buy older homes to avoid the costs and fees of solar panels. Alternatively, a potential house shortage could also cause home resale prices to increase.


There is a lot to consider as California gets closer to the January 1 deadline. Neighboring states are likely paying close attention to see if the change might be worthwhile for them as well.


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Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

The typical panels carry warranty only for 25 years. It is possible many will not make it to that warranty period. 20% energy from California is renewal energy. I surely think Navada and other Western States can do more. Need more wind generated power....

Mar 05, 2019 06:40 AM #1
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