When Irvine, Calif.-based City Ventures started sticking solar panels on all of its homes six year ago, the builder emerged as a front-runner in the race toward energy-efficient home building. Soon it will be joined on the track by every developer in California.
Starting in 2020, California will become the first state in the nation to require all newly built homes to be solar-powered. And many developers are figuring out how to comply with the new rules.
The California Building Standards Commission approved the mandate this month, finalizing a unanimous vote from the California Energy Commission in May as part of the state's ongoing battle against climate change. The rule applies to all single-family and multifamily residences of three stories or fewer.
"Too many homebuilders provide these features as an add-on, but that gives buyers a complicated choice," City Ventures Chief Executive Phil Kerr said. "We felt it best to make solar power a standard part of the home, like bedrooms or countertops. Why wait until 2020?"
The Energy Commission estimates that solar panels will save homeowners an average of $19,000 over 30 years but add roughly $8,400 to the upfront cost of a single-family home.
Affordability is the main concern for the California Building Industry Assn., which represents about 3,100 builders across the state and 85 percent of all new single-family and multifamily housing production.
"For $2 million homes, these mandates might not be a big deal," Chief Executive Dan Dunmoyer said. "But in markets like San Bernardino, this will be a factor for thousands of families trying to buy homes."
The Energy Commission worked closely with developers over the past five or six years to give the industry some flexibility.
"Our hope is that this didn't blindside anyone," said commission spokesman Amber Beck, adding that the agency held meetings and took comments from stakeholders.
A decade ago, the state set a goal to reach net-zero energy use in residential homes by 2020, meaning homes produce enough energy to offset all their electric and natural gas needs. The solar-panel mandate represents a step toward that goal.
Developers are the ones tasked with supplying the panels, so for buyers, the cost will be factored into their mortgage. From there, the choice is simple.
Homebuyers can purchase the solar panels, which the Energy Commission estimates would result in net savings of $35 a month in energy bills with the mortgage increase factored in. Developers place the total energy savings at 50 percent to 70 percent based on the size of the system used, among other factors.
Homeowners also can lease the panels from a third party. In this scenario, the company would own the panel and its energy, and in return, give the homeowner a 20 percent discount on the electricity bill. Leases usually run for about 20 years.
Things are a bit more complicated for developers, especially those that build less-expensive homes; they will need to find the cheapest way to comply with the law to avoid losing their target customer.
For some, salvation may lie in the mandate's allowance for "community-shared solar options," which could translate to off-site solar farms that would send the energy to the homes via transmission lines. This option would require a bit more planning -- as developers would have to buy land for the farms and find a way to distribute it -- but could save both sides a small fortune.
Dunmoyer estimates that these farms could lower the cost per home from $8,400 to $1,200 thanks to economies of scale. They could be operated by the builder, a solar company or a local utility company and be located hundreds of miles away from the home, since electricity can travel at about the speed of light, California Building Industry Association scientist Andrew Kosydar said.
Sacramento Municipal Utility District, which provides electricity to Sacramento County, is currently seeking certification for its SolarShares program. Set to launch next year, it allows new-home buyers to receive solar energy from a system built and maintained by the district.
"We're hoping to expand this affordable option because these new requirements are creating demand," Dunmoyer said.
Finding affordable options before the mandate goes into effect on Jan. 1, 2020, will be crucial for developers hoping to attract a wide range of buyers.
"Solar was always considered a luxury item in the past. Now it's going to be a necessity," said Dan Spiegal, president and co-founder of DMS Contractors, a developer based in Santa Monica. He said the added cost could be a problem for some.
Business on 12/18/2018