California is the First State to Require Solar Panels on New Homes

Blog posted On May 16, 2018

Last week, California became the first state in the country to require solar systems on almost all new homes.  Most new homes built after January 1^st, 2020, will be required to include a solar energy system.  The policy will apply to single-family houses and multifamily housing three stories or less, but will have some exclusions, including homes that are too shady to benefit from solar power.  

California is currently the nation’s largest market for solar power.  The new requirement aims to increase access to solar power and help Governor Jerry Brown achieve his initiative to cut carbon emissions by 40% over the next twenty years.  The California Energy Commission said the policy would cut greenhouse-gas emissions related to home energy use and also save homeowners money on utility bills. 

The California Energy Commission estimates that installing a solar system, like solar panels, can add as much as $9,500 to the cost of a new home.  However, the Energy Commission explains that cost would be offset by almost double the amount in expected energy and maintenance savings over the 30 years of owning the home.  Opponents of the policy claim that the solar requirement may lead to home price appreciation, in already heated markets, while proponents cite long-term savings as a major advantage.

Currently, California is building approximately 80,000 new homes each year, and about 15,000 of those homes include solar power systems.  With the new policy, some solar companies will have to shift focus from selling to individual consumers to selling in bulk to builders.  After the news broke, stock in solar companies like SunPower, Sunrun, and Tesla spiked.

Adding energy efficient upgrades to a home is one way for homeowners to cut utility costs, and in some regions, even earn a tax deduction.  Before upgrading your current home or buying a new energy efficient home, it is best to consult a financial professional to determine if it is the right investment for your situation. 

Sources: Bloomberg