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New California Solar Energy Efficiency Standards for Residential Buildings

Posted on Jun 5, 2018 in Real Estate, Blog by Craig P. Wood

On May 9, 2018, the California Energy Commission (“Commission”) issued a press release announcing that it had adopted building efficiency standards requiring that all residential construction in California be equipped with solar panels commencing as of January 1, 2020. In addition, the Commission adopted new standards for updated thermal envelopes to prevent heat transfer from the interior to the exterior of buildings and vice versa, residential and nonresidential ventilation requirements, and nonresidential lighting requirements.

These new building standards for new homes are part of California’s larger energy strategy that is outlined by the California Renewables Portfolio Standard (“RPS”). The RPS was established in 2002 under Senate Bill 1078 with the stated goal of making 50% of all energy production in California come from clean, renewable sources such as solar and wind by 2030. The Commission anticipates that these new building standards will “reduce greenhouse gas emissions by an amount equivalent to taking 115,000 fossil fuel cars off the road.”

Despite these apparent benefits to the environment, it is likely that these new building standards will increase the cost of construction. The Commission has estimated that the program may increase the cost of constructing a home by approximately $10,000. It was recently reported in the San Francisco Chronicle that cost estimates by builders, however, which include the mandate’s additional requirement of more efficient appliances, lighting, windows and insulation, are $30,000 in higher construction costs. Given that only 30 percent of households can afford the median home price of nearly $540,000, the effect of the mandate will be to reduce the number of households able to afford to purchase new homes in California. There is a concern that the increased cost of housing will lead more Californians to move further away from large job centers where the cost of housing is less, thereby increasing commuting times and further increasing carbon emissions from autos.

The Commission anticipates the average monthly payment on a 30-year mortgage for residential homeowners will increase $40 per month but save consumers $80 per month in electricity bills.

These new standards are not without their critics. Some renewable energy experts including some economists have questioned whether the environmental benefits of the new program might have been achieved at a lesser cost. These experts have argued that “inflexible requirements that apply to everyone – often don’t make sense” noting that it may not be economical, for example, to require builders to construct housing in shady areas where the intended long-term benefit of owing or leasing solar panels may not be realized by the homeowner even though the mandate exempts construction in certain shaded areas. Some new houses will be exempt if solar panels are infeasible, such as when a roof is in the shadows of another structure.  These economists have argued that relying on incentives rather than imposing certain requirements offers a more cost-effective approach to meeting pollution reduction goals.

Proponents of the new policy point to the likelihood of an increase in demand for solar to satisfy the requirements of the mandate and argue that demand could lead to innovations in renewable energy technologies.

In the end, like most policies, there will be countervailing benefits and burdens. Time will tell whether the anticipated environmental benefits justify the increased costs.

The VLP Speaks blog is made available for educational purposes only, to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site, you understand and acknowledge that no attorney-client relationship is formed between you and VLP Law Group LLP, nor should any such relationship be implied. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.