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California Becomes the First State to Make Solar Panels Mandatory

The new standard will bring the state closer to meeting its climate goals.
Workers install solar panels on the roof of a home on May 9th, 2018, in San Francisco, California.

Workers install solar panels on the roof of a home on May 9th, 2018, in San Francisco, California. 

Starting January 1st, 2020, virtually all new homes built in California will be equipped with solar panels.

As it stands now, just 15 to 20 percent of California homes are equipped with solar panels, but on Wednesday, the California Energy Commission voted in favor of new solar standards mandating that solar arrays be included on all new single-family homes and multi-family structures up to three stories.

California has long been a leader on solar energy, in terms of both employment and capacity. The state's solar industry employed over seven times more people than the second-ranked state at the end of last year, even after a 14 percent decline in solar employment in California in 2017. Several times last year, the state generated so much energy from solar that it paid other states to take the excess electricity off its hands. And now, California has become the first state in the nation to make solar panels mandatory.

"California is taking a step further basically recognizing that solar should be as commonplace as a front door welcoming you home," Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association, told CNBC.

New homes won't run solely on solar power, however, which would require batteries to power homes when the sun isn't shining, on cloudy days, or at night. But it will bring California closer to meeting its goal of "net-zero" energy buildings—structures that produce as much energy from solar as they consume when fossil fuel-based power plants pick up the slack—not to mention its climate goals more broadly. California has pledged to reduce its carbon emissions by at least 40 percent below 1990 levels by 2030, and electricity used by buildings is the second-largest source of emissions in the state.

California initially set its goal for achieving net-zero residences by 2020 and commercial buildings by 2030 more than a decade ago. But it's a hard threshold to cross: Meritage Homes Corporation, a real estate development company that builds single-family homes, adds solar panels to about 10 percent of its houses, but only about 1 percent of those produce as much energy as they consume.

The new rule contains exemptions for shaded houses or homes with roofs that are too small for solar arrays, and additional provisions that require homes to have more efficient insulation, windows, appliances, lighting, and heating to further reduce reliance on natural gas. Altogether, the new requirements could increase the cost of constructing a new home by $10,538, according to the commission.

The cost would be more than recouped by energy savings over the 25-year life of the solar arrays. "We're going to be able to look the home buyer in the eye and say, 'You are going to get your money back,'" Bob Raymer, the technical director for the California Building Industry Association, told the San Francisco Chronicle. That is, if the increased costs don't price even more buyers out of the state's troubled housing market.

California may lead the nation in solar energy requirements, but it ranks 49th in the number of housing units per capita. New development has not kept pace with the state's exploding population, which has sent home prices soaring. The median housing price in the Golden State is over $500,000, and in the Silicon Valley region in particular, the median home price is more than 11 times the median income. The result is what affordable housing advocates have called a "housing emergency."

Many officials, builders, and housing advocates in the state already blame environmentally friendly laws such as the California Environmental Quality Act for slowing down development.

But research shows that local regulations, rather than state-level environmental laws, do more to delay development with "redundant" reviews and convoluted land-use regulations.