The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (2023)

California Solar Mandate: Quick Facts

  • New homes built in CA after Jan 1, 2020 must be equipped with a solar electric system
  • Solar systems must be sized to offset 100% of the home’s electricity usage – but homes can still use energy from other sources, like gas
  • The size of the solar array can be reduced if other energy efficiency improvements are made elsewhere, like the inclusion of energy storage or green building materials
  • The CEC expects the mandate to add roughly $9,500 to up-front development costs, but save the homeowner $19,500 over the life of the system
  • Housing developers can save money on solar installation by sourcing wholesale materials and employing their own contractors to build the systems

Update (5/31/19): We’ve just published our 2020 CA Solar Mandate Calculator to help you figure out what size solar system you will need under the new requirements. Take a look!

By now you might have heard that California passed a law requiring all newly-built homes to be equipped with a solar power system. The California solar mandate is part of an initiative by the California Energy Commission to have at least 50% of the state’s energy produced from clean energy sources by 2030.

This article will focus on what we do best as a distributor of solar equipment: helping you design and price out your system with the new CA solar mandate in mind.

Our focus is helping housing developers and contractors comply with the new requirements. But the same rules apply to individual buyers who are shopping development work to a private contractor, or building the home themselves as a DIY project.

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If you live in California, and plan to build or buy a new home after this law goes into effect, this article will tell you everything you need to know to get started.

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Let’s answer the most pressing questions on your mind:

When does California’s solar mandate go into effect?

January 1, 2020. If you file for your building permit on or after this date, the dwelling must be outfitted with a PV system.

According to Greentech Media, homes which are granted a permit in 2019 and built in 2020 are not required to comply with this mandate.

Which buildings must be outfitted with PV arrays under the new code?

The mandate only applies to buildings under three stories tall. Larger developments, like a new highrise apartment building, will be exempt from these requirements.

Do I need to offset 100% of the building’s energy usage?

Not quite. New dwellings don’t need to be zero net energy (with 100% of the home’s energy use offset by PV production). Instead, they must be designed to achieve zero net electricity, with 100% of the unit’s electricity production offset by solar.

The home’s total energy budget accounts for mixed-fuel energy usage, which means it’s still ok to rely on other energy sources (typically gas) to power a certain portion of your home. You can still use a gas stove or central heat, for example, and that usage does not need to be offset by solar.

Under the mandate, each property is assigned an “energy budget” based on its square footage. The budget varies based on climate zone and other factors.

The responsibility for hitting these budgets will fall on housing developers, who can use the CEC’s compliance software to calculate the requirements for new homes.

Are there any exemptions to the sizing requirements?

The new mandate was built with flexibility in mind, and contains certain exemptions. For example, in buildings with multiple dwellings (like an apartment complex), common areas are exempt from the regulations. That lowers the burden on the size of the solar electric system.

There’s also a compliance credit for adding energy storage to your system. Storing energy in a battery bank reduces the burden on the utility grid, which gives providers a reason to incentivize the inclusion of energy storage.

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Homeowners who opt into energy storage are allowed to reduce the size of their PV array by 25%. So if you’re on the hook for 4 kW of solar, you could build a 3 kW system with energy storage to satisfy the requirements.

How much does it cost to install solar?

According to this NREL report (PDF) published in early 2018, the benchmark cost of a residential solar system is $2.70 per watt (fully installed).

Cost Breakdown:

  • Solar Panels: 50 cents per watt
  • Inverter: 20 cents per watt
  • Hardware (structural and electrical components): 30 cents per watt
  • Soft Costs – Install labor: 25 cents per watt
  • Soft Costs – Land Use, Sales Tax, Overhead, and Profit: $1.45 per watt
The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (2)

This benchmark figure assumes you turn to a full-service solar provider for design and installation—a factor that most frequently applies to residential end-users.

The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (3)

Housing developers are much more equipped to minimize these costs, because they can use their in-house workforce to complete the labor. You’ll be able to source the equipment from a wholesaler, cutting out the third-party installer who makes a profit by marking up their installation services.

If you’re a housing developer, you can apply to become a Unbound Solar partner and receive discounts on solar equipment, then perform the installation in-house.

Though NABCEP certification is nice to have, it’s not required to perform a solar installation. The work is straightforward enough that it can be performed by roofers, electricians and/or general contractors on your team who are competent and qualified enough to do construction work.

Many of our residential customers also choose to perform the installation themselves, using our DIY solar resources as guidance. The other option is to source the equipment directly, then turn to a local contractor to perform part or all of the installation.

This drives down installation costs significantly, as local contractors tend to be far more affordable than national providers: somewhere in the range of 75 cents/watt for installation services, vs. $1.60/watt from a large solar installer.

How to estimate the cost of solar based on expected energy usage

Looking for an estimate tailored to your home’s target energy usage? Here’s how to find an estimate based on your current usage:

Dig up a recent electric bill and look for your monthly kilowatt-hour usage. Then, plug that figure into our solar cost calculator to see how much it will cost to build a system that covers your usage patterns.

In step 7, if you choose the “Buy Direct” option (selected by default), please note that the system price estimate only includes the cost of equipment. To factor in installation costs, take the “System Ballpark Size” and multiply by 75 cents/watt, then add the two figures together for a total project estimate.

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Once you have a target system size, you can also take a look at our grid-tied system packages for up-to-date pricing.

What financing options do I have?

Individual home buyers have a variety of options to finance the addition of solar to their new home. Developers can roll these options into the purchase contract, offering community solar or lease/PPA agreements for more flexibility.

The best long-term value comes when the homeowner pays for the system up front and owns it outright. But that also requires the highest up-front investment, adding costs that may not fit within every budget.

The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (4)

If buying the system up front isn’t an option, there are other ways you can comply with the new law. These include:

  • Finance the system through a bank loan or FHA title 1 loan
  • Rent the system through a lease or PPA (power purchasing agreement)
  • Invest in community solar, a central solar system that distributes power to multiple dwellings in a neighborhood, apartment complex, etc.

Though loans, leases, PPAs and community solar arrangements don’t offer as much return on the investment into solar, they also require less up-front investment into the system. If the buyer doesn’t want to stretch their budget, these options are an enticing alternative.

Learn more about common financing options in the solar industry.

Do I need to offset 100% of my energy usage?

Not quite. Each property is assigned an energy budget based on its square footage, and the regulations are tailored to mixed-fuel homes. That means the energy budget is built on the assumption that the home will run off a mix of electricity and gas, with the latter powering your heating, for example.

The new mandate was built with flexibility in mind, and contains certain exemptions. For example, in buildings with multiple dwellings (like an apartment complex), common areas are exempt from the regulations. That lowers the burden on the size of the solar electric system.

There’s also a compliance credit for adding energy storage to your system. Storing energy in a battery bank reduces the burden on the utility grid. Homeowners who opt into energy storage are allowed to reduce the size of their PV array by 25%. So if you’re on the hook for 4 kW of solar, you could build a 3 kW system with energy storage to satisfy the requirements.

Does solar add to the value of my home?

Yes. While the up-front cost of solar is expected to add roughly $9,500 to the price of a new home, the resident is expected to save around $19,000 on energy costs over the life of ownership. (Source: CEC 2019 Building Energy Efficiency Standards FAQ)

Grid-tied solar systems almost always provide a net-positive return on investment over the life of the warranty.

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In addition, solar systems improve property value by an average of 3.74%, according to a paper published by the Lawrence Berkeley National Library. Homes with solar energy systems are more desirable to buyers, with solar-equipped homes fetching an average of $14,329 than their non-solar counterparts tracked by this study.

The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (5)

While those numbers fluctuate based on the size of the system (and the value of the home itself), the data suggests that homebuyers are willing to pay more up front in order to save money on utility bills in the long run.

Should you decide to sell your home in the future, you’ll be able to make back some (or all) of the original cost of the system at closing. This benefit comes in addition to the money you will save on energy bills while living in the home.

What system components will I need to buy?

Aside from the panels themselves, you need additional parts to build a complete solar power system. The essential components are:

The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (6)
  • Solar panels, to capture energy from the sun
  • An inverter, to convert that energy to a format that can power your appliances
  • Racking, the foundation on which you mount your system

These are connected by smaller components like wiring, fuses, and disconnects. You can also add equipment to monitor your system’s output online, which helps troubleshoot any issues with shading or defective equipment.

To eliminate guesswork, we offer several pre-sized packages with everything you need to get your system up and running.

What are the best solar brands and products on the market?

If you’d like to have a hand in the research process and pick your equipment yourself, we’ve got you covered. Take a look at our reviews of the best solar products on the market:

  • Best Solar Panels
  • Best Inverters (Grid-Tied)
  • Best Inverters (Off-Grid)
  • Best Batteries

We regularly re-evaluate and update these articles as prices change and new options become available. This is a great jumping-off point to help you design the best possible system for your specific needs.

MoreResources

California’s solar mandate doesn’t go into effect until 2020, but it’s never a bad idea to start the planning process early. Here are some of our most valuable resources to help you plan your solar project:

  • Solar 101: An Introduction to Solar Power
  • Solar Cost Calculator: Get a custom estimate based on your energy use.
  • Free Buying Guides (PDFs):
    • Getting Started With Solar
    • Solar Panels
    • Mounts
    • Inverters
    • Batteries
    • Federal Tax Credit
    • Permitting
  • Calculating Solar ROI (Return on Investment)

The California Solar Mandate Rolls Out In 2020. Here's What Developers & Homebuyers Need To Know. (7)

FAQs

Is solar mandatory in California for new homes? ›

In 2018, California created a mandate that new single-family homes and multi-family dwellings up to three stories high must install solar panels. The California solar mandate took effect on January 1, 2020, and is part of California's building codes.

What is the California solar Tax Credit for 2022? ›

The 26% federal tax credit is available for purchased home solar systems installed by December 31, 2022. Property tax exclusion on the added home value from the rooftop solar system.

Can Hoa restrict solar panels in California? ›

In the state of California, the California Solar Rights Act prevents HOAs from limiting a person's ability to install solar panels. In other words, your HOA can not prevent you from installing a solar electric system on your property.

Can a homeowner install their own solar system in California? ›

First off the good news, California does allow property owners to design and install their own solar systems on their own homes. The difficult part with this approach is that you have to know what you are doing and demonstrate your knowledge through accurate plan design and then proper electrical code installation.

Do solar panels increase property taxes California? ›

Do solar panels increase your property taxes in California? No. Due to California's Active Solar Energy Tax Exclusion incentive, you avoid increasing property taxes from a solar system through Jan. 1, 2025.

Is solar in California worth it? ›

In most situations, solar is worth it in California. This incredibly sunny state provides more than enough sun to make the costs of solar worth it, and that does not even factor in the numerous rebates and buy-back rates. Plus, the payback period is under six years, one of the lowest in the entire country.

Will there be solar incentives in 2022? ›

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.)

Does California have a free solar program? ›

California does not have a free solar installation program. No state currently has such a program. Instead, California offers tax incentives and rebates to reduce the cost of installing solar panels. This makes it cheaper to buy solar panels and convert to solar energy than in some other states.

How many years can you roll over solar tax credit? ›

While you can't use the tax credit to receive money back from the IRS, the Solar Tax Credit rollover lets you roll the tax credit back one year and carry the credit forward for up to five years. So, if you didn't owe federal taxes last year, you can still claim the Solar Tax Credit on this year's tax return.

Has NEM 3.0 been passed? ›

In August 2020, for the second time in just four years, the California Public Utilities Commission (CPUC) opened up a new proceeding to change California's net energy metering (NEM) program. Although no new rules or regulations have been rolled out, a final decision on NEM 3.0 is expected in 2021.

Do HOAs allow solar panels? ›

Solar access laws prevent HOAs from prohibiting solar panel installations or having contracts that restrict homeowners from installing them. However, HOAs can usually make certain requests about a system, as long as they don't make the proposed solar system less effective or more expensive.

Can you have off grid solar in California? ›

The California Electric Code and Other Parts Of Title 24 Allow Off-Grid Systems. The California Electric Code provides: “Solar photovoltaic systems covered by this article may be interactive with other electric power production sources or stand-alone, with or without electrical energy storage such as batteries.”

Does California Building Code require solar panels? ›

In 2018, California mandated that new single-family homes, as well as multi-family dwellings up to three stories high, must include solar panels starting in 2020. A second mandate was also voted into law, requiring new commercial buildings to have solar panels and battery storage as well.

Do I need permission to put solar panels on my roof? ›

You need only apply for full planning permission (flats) or householder planning permission (houses) to install a solar panel when any of the following apply: it would protrude more than 20cm from the external surface of the wall or roof slope, when measured perpendicularly.

Do you need an MCS certificate for solar panels? ›

An MCS certificate is proof that your installation has been designed, installed & commissioned to the highest standard using only MCS certified products by an MCS certified installer. Please note that an MCS certificate is not a mandatory or legal requirement for system installation.

How much does solar Add to homeowners insurance? ›

So, how much does home insurance go up with solar panels? On average, homeowners see their rates increase by about 20% when they add solar panels to their homes. This may not seem like a lot, but it can add up to hundreds of dollars per year.

Do solar panels raise your property taxes? ›

Houses with solar PV systems sold for more than comparable houses without solar. This is because solar PV systems are exempt from property taxes and the increased value is not taxable.

Does solar raise property value? ›

According to Zillow, homes with solar panels sell for approximately 4 percent higher on average than homes without solar energy. That means an added value of about $9,200.

How long does it take for solar panels to pay for themselves? ›

The most common estimate of the average payback period for solar panels is six to ten years. This is a pretty wide range because there are many factors that will influence the number of years it can take to pay off your panels and the monthly savings you can expect.

How much do solar panels cost for a 2500 square foot house? ›

Home. The cost range of installing solar panels for a 2,500 sq. ft. home ranges from $18,000 to $55,000.

Does California offer a tax credit for solar? ›

Most California residents are eligible to receive the Federal Solar Tax Credit—also known as the Residential Clean Energy Credit. Originally known as the Investment Tax Credit (ITC), it covers up to 30% of the cost of installing a solar panel system.

What is the average cost of solar panels in California? ›

As of September 2022, the average solar panel cost in California is $2.81/W. Given a solar panel system size of 5 kilowatts (kW), an average solar installation in California ranges in cost from $11,942 to $16,158, with the average gross price for solar in California coming in at $14,050.

Can you claim solar tax credit twice? ›

Technically, you cannot claim the solar tax credit twice. The unused amount of the credit will continue to roll over to the next tax year if you owe less taxes than the credit. If you own more than one home with solar, you might be eligible to claim the credit more than once.

Is it better to lease or buy solar panels? ›

Owning or leasing solar panels both allow homeowners to enjoy utility bill savings while helping the environment. Leasing is better if you want to get started with solar without a large initial investment while owning is the best way to save money long-term.

What rebates are available for solar in California? ›

Solar for Affordable Housing

The program offers one up-front incentive level of $3/Watt to all qualifying applicants to eligible households within the PG&E, SCE, and SDG&E territories.

Is the solar tax credit a one time credit? ›

How Many Times Can You Claim The Solar Tax Credit? You can only claim the solar tax credit one time for your solar power installation.

How does the California solar tax credit work? ›

If a solar system is placed in service in 2022, you will qualify for a 26% tax credit instead of 22%. You must purchase the system to claim the ITC. Consumers may not claim the tax credit for leases or Power Purchase Agreements (PPA).

What is the solar tax credit for 2023? ›

(The new Residential Clean Energy Credit supersedes an older law, set to expire in 2024, that would have provided a 26 percent credit for solar installations this year, and 22 percent in 2023.)

Is there an energy tax credit for 2022? ›

Tax credits for residential energy efficiency and those for builders of energy efficient homes were extended retroactively, through December 31, 2022.

Will NEM 2.0 be grandfathered? ›

Grandfathering for the current NEM tariff (NEM 2.0) is extended to customers for 20 years. In the event of a new NEM tariff, NEM 2.0 customers are grandfathered to their tariff for 20 years from their PTO date.

Will NEM 1.0 be grandfathered? ›

If you've already gone solar, you are grandfathered into your current net metering (NEM 1.0) contract for 20 years from the point when the utility gave you approval to power up your system.

Is California getting rid of net metering? ›

California's net metering program, NEM 2.0, is being replaced with NEM 3.0 in early 2022.

Do solar panels affect neighbors property values? ›

So while it may not affect the appraised value of your property or your neighbor's, it may limit the pool of buyers for yourself and your neighbor in case one of you wants to sell in the future. Homes with Solar Panels generally have their value increased. This would cause comps to increase as well.

Do solar panels reduce heat on roof? ›

According to a study conducted by researchers at UC San Diego Jacobs School of Engineering, solar panels reduced the amount of heat reaching the roof by an incredible 38%, keeping a building's roof 5 degrees cooler than portions of a roof exposed to sunlight directly.

Can my HOA stop me from installing solar panels in Florida? ›

Homeowners associations in Florida

Florida Statute 163.04 forbids any binding agreement (between HOAs or otherwise) to prohibit a property owner from installing solar. An HOA may restrict where you place your solar panels, but not if the system's performance suffers as a result.

Why are people moving off the grid? ›

Angry over blackouts, wildfires caused by utilities and rising electricity bills, a small but growing number of Californians in rural areas and in the suburbs of San Francisco are going off the grid. They can do so because of a stunning drop in the cost of solar panels and batteries over the last decade.

Can you take your home off-grid? ›

In many states, disconnecting from the power grid is entirely lawful, but some local regulations may require you to follow specific procedures, pay fines or even stay connected. It is important that you get familiar with the restrictions in your area before you make plans to go off-grid.

Can a home be completely solar powered? ›

With a modern solar energy system, including power storage, you can definitely run a whole house completely on solar power. Today's high-efficiency solar panels and solar batteries make it cheaper than ever before to power an entire home exclusively using solar energy.

Do solar panels increase property taxes California? ›

Do solar panels increase your property taxes in California? No. Due to California's Active Solar Energy Tax Exclusion incentive, you avoid increasing property taxes from a solar system through Jan. 1, 2025.

Do new homes in CA have to have solar? ›

What Is The California Solar Mandate? In 2018, California created a mandate that new single-family homes and multi-family dwellings up to three stories high must install solar panels. The California solar mandate took effect on January 1, 2020, and is part of California's building codes.

What is the California solar Tax Credit for 2022? ›

The 26% federal tax credit is available for purchased home solar systems installed by December 31, 2022. Property tax exclusion on the added home value from the rooftop solar system.

Can Neighbours object to solar panels? ›

What can they do? If your installation is permitted development, or has planning permission, there isn't too much your neighbours can do legally. But you don't want to damage your relationship with them. They can still make your life difficult and create unpleasantness if their concerns are not addressed.

How many solar panels Am I allowed on my roof? ›

No, there is no limit to the number of solar panels you can have. However, there may be a limit on how much power your system is allowed to generate. Some utility companies limit the amount of electricity that a grid-tied solar system can generate.

When did building regulations come into force for solar panels? ›

New Part L building regulations will come into force from 15th June 2022.

Do new build houses have to have solar panels? ›

All new build homes today are required to include energy saving measures such as Solar PV, in order to be self-sufficient and pass SAP calculations.

Does California Building Code require solar panels? ›

In 2018, California mandated that new single-family homes, as well as multi-family dwellings up to three stories high, must include solar panels starting in 2020. A second mandate was also voted into law, requiring new commercial buildings to have solar panels and battery storage as well.

Should all homes have solar panels? ›

The California solar mandate is a building code that requires new construction homes to have a solar photovoltaic (PV) system as an electricity source. This code, which went into effect on January 1, 2020, applies to both single-family homes and multi-family homes that are up to three stories high.

How many homes in California have solar panels? ›

It worked. California now has 1.3 million solar systems on homes, far more than any other state, according to the solar industry. That number will only grow because since 2020 all newly constructed homes in California must have solar panels.

Why are all new houses not built with solar panels? ›

Solar panels are an expensive installation and, at least for existing homeowners, the cost of installation won't be paid pack in electricity bills for many years. However, new build properties have the advantage of the cost already being incorporated before the customer buys the house.

Why dont we put solar panels on every house? ›

This is because solar panels don't have the capacity to store energy for use later in the day. This doesn't mean it's not possible at all, but to store energy you'll also require the addition of a battery bank, making the installation more complex and expensive.

Why haven't we covered all the roofs with solar panels? ›

Solar energy from our Sun is constantly bombarding us, even at night – we just can't see it because of our planet's orbit and rotation.

Is there sales tax on solar in California? ›

Solar power facilities may qualify as farm equipment and qualify for a partial exemption of the sales tax, currently 5.25 percent, for farming equipment and machinery that is primarily used in agricultural activities.

Has NEM 3.0 been passed? ›

In August 2020, for the second time in just four years, the California Public Utilities Commission (CPUC) opened up a new proceeding to change California's net energy metering (NEM) program. Although no new rules or regulations have been rolled out, a final decision on NEM 3.0 is expected in 2021.

How long do solar panels last? ›

When you're doing your research for this sustainable energy source, it's important to factor in how long solar panels typically last. The industry standard for most solar panels' lifespans is 25 to 30 years. Most reputable manufacturers offer production warranties for 25 years or more.

What is the main disadvantage of the solar panels? ›

The Disadvantages of Solar Energy

One of the biggest problems that solar energy technology poses is that energy is only generated while the sun is shining. That means nighttime and overcast days can interrupt the supply.

Can a house run on solar power alone? ›

With a modern solar energy system, including power storage, you can definitely run a whole house completely on solar power. Today's high-efficiency solar panels and solar batteries make it cheaper than ever before to power an entire home exclusively using solar energy.

How long does it take solar panels to pay for themselves? ›

The most common estimate of the average payback period for solar panels is six to ten years. This is a pretty wide range because there are many factors that will influence the number of years it can take to pay off your panels and the monthly savings you can expect.

Does California have a free solar program? ›

California does not have a free solar installation program. No state currently has such a program. Instead, California offers tax incentives and rebates to reduce the cost of installing solar panels. This makes it cheaper to buy solar panels and convert to solar energy than in some other states.

What city in California has the highest levels of potential active solar generation? ›

San Diego is the state's clear solar power leader in terms of both the number of solar rooftops and the amount of solar energy generated by those solar systems (capacity installed), with more than 2,000 solar roofs totaling nearly 20 megawatts installed to date, as seen in the Figures 2 and 3.

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