Energy efficiency is the name of the game in new construction. Being environmentally conscious is trending in resale homes, as well. Although many green homes exist, with energy-efficient appliances such as programmable thermostats, low-water usage washing machines and dishwashers, and low-energy lightbulbs, a powerful exterior addition is about to become a permanent solution in California’s new construction market: renewable energy in the form of solar panels.
California is the first state to order the installation of solar panels on nearly all new homes built after Jan. 1, 2020, as part of the 2019 Building Efficiency Standards set by the California Energy Commission.
“Under these new standards, buildings will perform better than ever at the same time they contribute to a reliable grid,” said California Energy Commissioner Andrew McAllister in a statement. “The buildings that Californians buy and live in will operate very efficiently while generating their own clean energy. They will cost less to operate, have healthy indoor air and provide a platform for ‘smart’ technologies that will propel the state even further down the road to a low emissions future.”
The solar industry has been growing, with U.S. installations surging to 15,000 in 2016, compared to 7,000 in 2015, according to the Solar Energy Industries Association® (SEIA). In addition, solar has provided increasing job opportunities. Close to 250,000 Americans work in solar—a number that has nearly doubled since 2012. With California’s mandate, more jobs in solar will become available.
Nevertheless, critics are worried that California’s crumbling housing infrastructure will not be able to support the influx of jobs and the impact of the mandate. While a boon to investors of renewable energy and solar panel businesses, California is already one of the most expensive housing markets in the country, facing a challenging housing crisis stemming from inflated prices and an inventory shortage.
What will this mandate do to current home prices? Experts say consumers will have to pay more for these homes, even though homeownership is already out of reach for many Californians. The Commission estimates that this mandate and other energy-efficiency requirements would add $9,500, on average, to the cost of building a home in California. Although an average of $40 would be added on to homeowners’ monthly mortgage payments, the commission estimates they would save $80 per month on heating, cooling and lighting bills.
As more homes install solar, prices for installation and services may drop, helping to ease inflation. In fact, history shows solar power is becoming more affordable. According to the SEIA, the cost to install solar has decreased by over 70 percent since 2010—even with a slight uptick in the second half of 2017 to $1.50 blended average per watt, solar has become much more accessible to the masses since it first began to gain ground in 2009 at $7.50.
The question is: Will this get the ball rolling for other states to follow suit? If California can reach its goal—reducing greenhouse gas emissions by an amount equivalent to taking 115,000 fossil fuels cars of the road—the state may be paving the way toward a national, and perhaps eventually global, environmentally-conscious housing industry. Critics will be watching closely, as any challenges could have a severe impact on California’s market, and would make other states wary of adopting similar eco-strategies.
“With this adoption, the California Energy Commission has struck a fair balance between reducing greenhouse gas emissions while simultaneously limiting increased construction costs,” said California Building Industry Association CEO and President Dan Dunmoyer. “We thank the Commissioners and their staff for working with the building industry during the past 18 months and adopting a set of cost-effective standards that ensures homebuyers will recoup their money over the life of the dwelling.”
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.
