California solar mandate: What you need to know

If one state leads the rest of the country in setting the bar for solar, it's California: the Golden State consistently tops the Solar Energy Industries Association's list for the best states for solar, having more than four times the installed capacity than the runner up (North Carolina).

While California has an abundance of sunshine, that's surprisingly not the primary reason for the prevalence of solar panel installations throughout the state. Much of California's success in solar is the result of forward-thinking policies set by the state government, from the California Solar Initiative (CSI) to its ambitious clean energy goals.

The future of solar in the Golden State is looking brighter than ever thanks to the new, first-of-its-kind California solar mandate, a recent code that requires new homes to be built with a solar electricity system. In this article, we'll give an overview of the mandate and go over some costs and savings estimates for future homebuyers in California.

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 single- and multi-family homes that are up to three stories high.

The solar panel system needs to be large enough to meet the annual electricity usage of the building; given that electricity usage can be challenging to determine in new construction projects, builders use an estimate for each property that's based on the building's floor space and the climate zone in which it's located.

However, there is flexibility when sizing the solar panel system. For one, builders can decrease the size requirement of a design on a property by incorporating battery storage into the building. You can reduce the required size of the solar panel system by as much as 25 percent when you pair it with a solar battery, such as the Tesla Powerwall or LG Chem RESU10H. Plus, by incorporating energy efficiency measures or other demand-responsive measures into building design alongside battery storage, the required PV system sizes can be downsized by 40 percent or more.

There are a few types of new residential construction that are exempt from the code. In some cases, properties with a small enough roof or those that receive an abundance of shade may be exempt from installing a PV system. Additionally, building developers are welcome to pursue and build community solar projects, as opposed to rooftop solar panel systems for each property, as long as they receive approval from the California Clean Energy Commission (CEC) and the local utility company. Any community solar project offered instead of onsite solar needs to offer similar benefits to the new homeowner that a rooftop or ground-mounted system on their property would provide.

The California Clean Energy Commission conducted a cost-effectiveness study to determine cost and savings implications for Californians purchasing a single-family home under these new building codes. They found that, with the solar panel requirement, the cost of a newly constructed single-family home will increase by approximately $8,400, equivalent to roughly $40 extra per month in mortgage payments. (Note: they calculated this estimate using a cost assumption of $3.10 per watt for the installed solar panel system, higher than the average cost of solar quoted for California properties on the EnergySage Marketplace.)

However, the CEC also predicts that while upfront costs of new homes will increase, the savings benefits for new homeowners far outweigh these initial costs. Assuming an average electricity rate of approximately 18 cents per kilowatt-hour (kWh), the state estimates that single-family homeowners will save about $80 monthly on electricity costs. These monthly electricity bill savings, combined with paying an extra $40 monthly in mortgage payments for the solar panel system, means new homeowners will come out with $40 net savings each month. Annually, this comes out to $500 per year in savings. Should electricity prices continue to rise and the cost of solar continue to fall, these savings numbers only stand to increase.

Whether you're building a home in California or another state, it's worth exploring your solar options. If you want to see what you can save with a solar panel system, our free-to-use Solar Calculator gives you ballpark estimates for both costs and savings with installing solar on your home or business. When you're ready to take the next step, register for the EnergySage Solar Marketplace to receive and compare up to seven custom solar quotes online from local installers.