Starting in 2020, virtually all new homes in California will be required to incorporate advanced efficiency measures and rooftop solar — in an historic development for clean energy in the state.
The California Energy Commission (CEC) voted unanimously to adopt the policy today as part of the state’s Building Energy Efficiency Standards, following more than two years of work with a wide range of stakeholders to develop the technical requirements.
Updates to the Title 24 standards are projected to reduce home energy use by 53 percent compared to the current code, saving Californians $1.7 billion in energy costs over the next 30 years. This calculation, conducted by the CEC, does not take into account increased energy demands or a reductions in technology costs, which could result in even greater savings over time.
The new rules apply specifically to all new residences and major home renovations on buildings under three stories, starting on January 1, 2020. In the event a building isn’t suitable for a rooftop array, the standards require homes have access to community solar or offset energy usage through additional efficiency gains, while some homes may be exempt.
Around 15,000 new homes are built each year that include solar panels, according to the CEC. When the new standards take effect, that number is expected to jump to around 100,000 new solar homes per year.
“This is an undeniably historic decision for the state,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association.
According to SEIA, the change will amount to an additional 200 megawatts of solar deployed in the state annually, which is a conservative estimate given some homes will be able to comply with solar systems under 3 kilowatts. For comparison, California added 858 megawatts of residential solar last year from 127,000 new residential solar systems, with an average size of 7 kilowatts.
Ross Hopper noted in an interview that deploying solar as part of the home building process will normalize the technology for tens of thousands of families, in a positive way.
“It’s a weird word, but the normalization of solar is important,” she said. “There are 100,000 customers annually that will see the acquisition of solar as a normal part of their home transaction. You have a front door, you have an HVAC system and you get solar panels.”
“I can’t overstate how strongly I feel about normalizing the solar experience so it feels less risky to the consumer,” said Ross Hopper.
While the Title 24 rules apply only to new homes, they could help support solar sales to existing homes through greater public awareness.
In addition to the solar requirement, the new building standards will offer a credit for solar capacity combined with on-site energy storage. The current standards offer a solar-only credit, allowing for a tradeoff between solar power and energy efficiency. The new 2019 code ensures more homeowners benefit from efficiency while incentivizing solar-plus-storage.
“The combination of rooftop solar and the option to add energy storage systems as an efficiency compliance credit provides builders with an attractive, cost-effective option to fully electrify homes,” said Ross Hopper.
Homebuilding firms, which are responsible for complying with the new codes, will have optionality in how they comply with the new solar mandate, she added in an interview. They can roll development costs into a mortgage, offer the customer a lease, or present another type of financing product. The decision will ultimately come down to what the customer wants.
A key element in crafting the new standards was to ensure that the efficiency upgrade and solar systems would be affordable to all Californians. Adding solar is expected to add $8,000 to $12,000 to the cost of a home, which has sparked some opposition. Some energy experts argue deploying large-scale solar projects would be a much more economical way to decarbonize California's energy system.
However, after weighing the data, the CEC determined homeowners would ultimately save money on their energy bills to the tune of $40 per month (CEC calculations found the standards will add about $40 to an average monthly payment, but save consumers $80 on monthly heating, cooling and lighting bills). Commissioner Andrew McAllister said the new standards for efficiency, solar and energy storage will also "contribute to a reliable grid."
California Building Industry Association CEO and President Dan Dunmoyer said Wednesday that the CEC "has struck a fair balance between reducing greenhouse gas emissions while simultaneously limiting increased construction costs." The association came out in support of the new codes, as did several affordable housing groups.
“Low mortgage payments alone don’t make for affordable housing,” said George Koertzen, construction superintendent at Habitat for Humanity in San Joaquin County, in a statement. “It’s also important to make sure families can afford to pay the energy bills that keep the lights on, the temperature comfortable, and the hot water flowing.”
“That’s why Title 24 is so important,” he continued. “Strong energy-efficiency codes for housing help keep utility bills down, and help families stay in their homes.”
Lynn Jurich, CEO of leading home solar installer Sunrun, noted that solar leasing is particularly well suited for compliance with the new codes because it offers immediate bill savings without any upfront costs. "I think this is a real opportunity for the solar-as-a-service business model," she said.
California has a mandate for new homes to be “net-zero energy” — meaning they produce more energy than they consume — by 2020, and for all new commercial buildings to be net zero by 2030.* The policy approved by the CEC today helps to achieve that goal, but doesn’t get all the way there, said Rachel Golden, senior campaign representative at the Sierra Club.
“While we’re very pleased and supportive of the building code…it really is zero net electricity, not net zero energy, because it doesn’t take into account gas use in homes and buildings, and gas use makes up about 40 percent of a home’s greenhouse gas emissions,” she said.
The Sierra Club submitted a letter to the CEC this week, including 5,858 digital signatures from members and supporters, calling for the Commission to reduce the reliance on gas in the next building standards update, which takes place every three years.
“California now burns as much gas in our buildings as we do in our power plants,” the letter states. “While we have programs to increase the use of renewable energy and reduce our reliance on gas plants, we do not have policies in place to replace gas use in buildings with available high-efficiency electric technologies that can be powered by clean energy.”
In its latest Form 10-K filed with the SEC, Southern California Gas Company identified electrification as a major risk to its bottom line. As GTM reported, the company’s efforts to block more stringent efficiency standards are now subject to an inquiry by the Office of Ratepayer Advocates at the California Public Utilities Commission.
As for the new Title 24 standards, the California Building Standards Commission still has to sign off on the rules. But approval there is largely considered a formality.
According to a SEIA technical expert, rooftop solar systems required under Title 24 must be sized with annual electrical output equal to or greater than the dwelling’s annual electrical usage as determined by an equation specified in the code. The average system size across California's 16 climate regions would be 3.38 kilowatts, with the smallest model system sized at 2.7 kilowatts in San Diego and the largest sized at 5.7 kilowatts in Palm Springs.
This story has been updated to clarify that homeowners are expected to see a net savings of $40 per month, and to include additional comments from Sunrun, SEIA and the California Building Industry Association.
*An earlier version of this article incorrectly stated that all homes must be net zero by 2030. The mandate requires all new commercial construction to be net zero by 2030.