California Dreaming: Rooftop Solar and the Future of the Homebuilding Industry

By Ronak Patel

New Standards

On Wednesday, May 9th, 2018, the California Energy Commission voted in favour of a new building standard that will see all new homes and low-rise apartment buildings require a solar PV system, starting in 2020. 

California is the first state to implement this kind of mandate as part of their overall energy efficiency standards and although leading-edge this move makes sense with the cost of rooftop solar at such an affordable level. The cost- effectiveness of rooftop solar over the last decade stems from the reductions in PV technology manufacturing costs, new financing methods, and the growing green industry. Government policies and financial incentives have also pushed the rooftop solar business forward. Solar PV is no longer a niche market and this new standard in California is a prime example. 

Local Impact

The sunny state of California is already the leading US solar market with its progressive policies on clean energy generation. As the state is committed to reducing their carbon emissions by 40% before 2030, this new energy efficiency standard serves as a method to reach said target.

This future-forward mandate showcases why California is a leader in the solar industry, but there are still many concerns to be addressed. The cost to install rooftop solar is still high, and this mandate may cause homes to cost more, even within the already costly California housing market. However, real estate markets are often characterized by home prices that are much higher than the actual cost of building a home. At the same time, installing a solar system is an investment, and unlike a granite countertop or sunken living room, actually represents an upgrade with a financial payback.

From a grid management point of view, increasing the number of decentralized microgenerators only increases the resiliency. However, without a viable solution to energy storage, increased solar penetration will only increase the “duck curve.” Adding solar will increase the over-generation of electricity in the middle of the day and strain other power plants to ramp up, once the sun sets. This effect of solar generation changes the fundamental electricity supply and demand portfolio and can negatively affect the reliability of the grid. 

Another case that can be made against the mandate is based on the goal itself. Generally, large-scale solar or wind turbine farms are much more cost effective than rooftop solar when it comes to reducing carbon emissions. Government policy could also focus on vehicle standards or increasing population density to find emission reduction opportunities. 

The Future of Homebuilding

The policy mandate is supported by local home builders, the solar industry, and politicians, showing buy-in from all major stakeholders. This move can also serve as a framework for similar standards to be implemented in other jurisdictions.

Implementation of policies like this can change the importance of rooftop solar. In the same way that all homes are equipped with a water heating appliance, it is easy to see how all homes may now come equipped with a decentralized energy generation appliance. Increasing the amount of solar installation will likely also increase innovations and decrease costs, further increasing the viability of solar. It is easy to imagine how Tesla’s solar roof tiles and other building integrated solar PV system will benefit from this mandate. 

Addressing the concerns of grid management from earlier, increased solar penetration will force the grid to adapt. Although costly, smart grid upgrade has a vast potential for time-of-use rates, load balancing, and net metering features. 

Overall this policy is not the golden bullet for California or any other jurisdiction. No one policy will be. Climate action is a complicated issue and needs a diverse portfolio of plans, policy, and programs as a way to transition to a sustainable future.