California becomes first state in nation to require solar panels on houses

Photo (c) Patrick Civello - Getty Images

The state won over builders with exemptions for smaller roofs

Less than a decade ago, California McMansion owners and others who wanted to install solar panels on the roofs of their own houses risked the wrath of their image-conscious homeowners associations.

But the state has gradually become more solar-friendly since then, and the rules are about to go a step further. New homes built in California after the start of 2020 will be required to be equipped with solar panels, the California Energy Commission ruled on Wednesday.

Shortly after California officials announced their decision, homebuilders saw their stock prices drop, while solar shares rose, Bloomberg news reported. The California Energy Commission estimated that the move would drive up housing costs by $10,000, but it says that the decision will eventually save consumers in the form of reduced energy bills.

Builders had initially criticized the measure but were on board with the final rules, after regulators agreed on Wednesday to a series of exemptions -- including one for houses with roofs too small to support solar installations.

"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.

Improving energy efficiency

California has led the state with renewable energy programs, including putting pressure on the federal government under Obama to adopt tougher emissions standards for cars and a goal for the state’s electrical grid to be sourced from 50 percent renewable energy by 2030.

“Improved efficiency unlocks millions in utility bill savings for consumers and lightens the load on our electricity system,” the California Energy Commission has said of its various renewable energy initiatives.

Homeowners Associations (HOAs) used to file lawsuits against homeowners in California who installed solar panels on their houses until the state passed a law to curb the practice in 2014.

Other sunny states are still struggling to bring solar panels to the masses. In Florida, the state’s main utility, Florida and Power & Light, had lobbied heavily to keep laws in place that made it illegal for homeowners to power their own homes with solar energy provided by solar panel leasing companies, a popular choice for middle-class consumers who cannot afford to buy their own panels.

After receiving heavy criticism for their role in limiting solar in the wake of Hurricane Irma, the Florida Utilities Commission last month overturned the long standing rule, opening up the doors for solar companies to start selling power in Florida.

The solar industry hopes that California will encourage the rest of the nation to follow its lead.

"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.

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