Is the California solar panel mandate a good idea?

For business

California always has been at the forefront of renewable energy. The state is fourth in installed wind capacity and first in installed solar capacity, and it has enacted countless green goals for electric vehicles and even lightbulb efficiency.

Last month, the California Energy Commission made its biggest push for renewable energy when the five-member committee unanimously voted in favor of a state mandate requiring new homes and residential buildings to install rooftop solar panels.

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The CEC’s decision – the first of its kind in the nation – has elicited both accolades and heavy backlash from a range of energy experts, policymakers and housing officials across the country.

Will the solar mandate hurt Californians?

The rooftop solar mandate has solidified the state’s status as the renewable energy champion, but many are concerned the law will do more harm than good.

One major concern that has economists and housing officials worried is what the solar panel requirement will do to the already-outrageously expensive residential real estate market. The CEC claims the mandate will increase average home construction costs by only $9,500; however, independent policy consultant Todd Royal points out that the current cost of installing rooftop solar in California is actually more than $19,000.

Furthermore, the requirement to install solar panels could actually increase material and installation costs. Because homeowners must put up the panels by law, experts warn that solar panel companies will no longer be incentivized to offer competitive pricing. Critics therefore believe that the mandate will negatively affect California’s lower- and middle-class by implementing additional costs they simply cannot afford.

Even environmentalists are unimpressed

While rooftop PV installations are decidedly cleaner sources of energy than fossil fuels, some energy experts think California could have chosen a different path to achieve its renewable energy goals.

According to the CEC, the mandate will cut harmful emissions by 700,000 metric tons by 2023. But, Dr. Severin Borenstein of the Haas School of Business at UC Berkeley explains that there are more cost-effective ways to achieve zero-carbon energy goals. Solar farms, for example, cost about half the price of rooftop PVs to build and maintain and contribute more clean energy to the grid.

Environmental economist Garth Heutel suggests the alternative policy of taxing pollution itself. This market-based policy would force people and companies to pay for the “right to pollute” and is already seeing success in British Columbia and the European Union.

Are there any benefits to the solar mandate?

Although the rooftop solar requirement will raise home prices by at least $9,000, the mandate could end up benefiting California utility customers in the long-run. Net-metering programs already are in place across California, allowing residents with solar panels to sell energy back to the grid.

Another potential benefit is the increased energy autonomy that rooftop solar gives to Californians. CEC spokeswoman Amber Beck explained that the mandate could lead to lower utility bills, saving customers roughly $20,000 over the next 30 years.

The solar mandate will also help drive California to achieve its goal of running on 50% clean energy by 2030. And, of course, it’s good for the environment.