Solar panel mandate causes concern among homebuilder trade group

By on May 21, 2018

Starting in 2020, all houses built in California must have solar panels. That will add to the cost of houses, but trade group officials say the move was inevitable.

You’ll never guess which agency is supporting the state’s plan to require solar panels on virtually all new houses.

The Building Industry Association of California.

Yes, the organization that lobbies on behalf of the state’s homebuilders, and battles any government act that adds to the cost of building a single-family dwelling, is endorsing a program that will add about $9,500 to the cost of building a house.

In a state where not enough houses are being built to meet demand, opposing such a program would seem to be an easy call.

Not so, says one of the non-profit association’s top executives.

“We were faced with two choices,” said Robert Raymer, technical director with the Sacramento-based association. “We could get on the train and ride with it, or we could stand in front of the train and get hit by it. We decided to take the ride.”

That ride got started May 8th, when the California Energy Commission added regulations to the state’s building codes, one of which states that, as of Jan. 1 2020, all new houses of three stories or more must include solar panels.

When solars can’t be installed, homeowners must have their homes renovated to account for the absence of solar panels or get assistance from a community solar program.

That vote, which doesn’t require the state legislature’s approval, made California the first state to require solar panels on new houses. California is adding approximately 113,000 single-family units a year, not nearly enough to meet demand, and only about 15 percent of those include solar panels, according to the energy commission.

The five-member panel also made changes regarding insulation, water heating, and air conditioning, among others. Each of those actions has been in the works for more than 10 years, and all are intended to bring about full zero net energy, which means people will use as much energy as they produce, Raymer said.

Opinions vary on whether adding solar panels will create enough energy to justify making them mandatory on new homes. They’re expensive, and emphasizing one reduction method in place of others won’t necessarily help the state reduce carbon emissions any quicker than it otherwise would have.

Then there’s the question of what the solar panel mandate will do to the state’s housing market. One theory proposed by vox.com, a news and technology website, is that the upfront costs, because they’re not that high, will expand the residential solar panel market and ultimately drive down the cost of that technology.

The website concluded that the state’s housing market will thrive in the long run, but not everyone agrees, especially since the industry is not strong now.

“Our builders are talking about it and they’re very concerned about it,” Raymer said. “California is in the middle of an historic housing crisis, especially in the Central Valley, and adding about $10,000 to the cost of a house isn’t going to help things very much.”

The energy commission, along with the Public Utilities Commission and the Air Resources Board, have been working since the mid-2000’s on cutting the state’s carbon emissions, of which the solar panel mandate is only one part.

Originally, installing solar panels on new houses was going to add about $35,000 to the cost of a home, so the $9,500 figure can be seen as a victory for the building association.

“We told them that was too high, that it wasn’t cost-effective and that we couldn’t go along with it,” Raymer said. “They agreed, and they got the number down to where it is now. We knew all along that we couldn’t fight this, that we had to be part of the deal.”

Some homebuilders already put solar panels on their new homes while others offer them to any buyer who requests them, said Bill Blankenship, executive officer of the building association’s Riverside County chapter.

“Ideally, I think we would like to see the market determine the demand for this product,” Blankenship said. “As it is, it’s one more thing the market will have to absorb, although I think our people in Sacramento got the best deal they could.

“But we already have too many fees that put pressure on housing prices.”

The mandate could put a strain on the solar panel industry, according to Blankenship.

“I don’t know if there are enough people to install panels,” he said. “Our homebuilding numbers are anemic, and this will slow statewide homebuilding even more.”

The solar panel mandate will affect middle class buyers more than anyone, and that will not be good for the state’s housing market, said Jay Prag, professor of economics and finance at the Drucker School of Management at Claremont Graduate University.

“You won’t see it affect the sale of $600,000-plus houses,” Prag said. “Wealthy people can afford it and they consider it part of their mortgage. But it will drive a lot of middle-class people into apartments.”