Photo courtesy of Roland Balik/U.S. Air Force
Ecmweb 25244 Pv Pioneers 0719 Pr
Ecmweb 25244 Pv Pioneers 0719 Pr
Ecmweb 25244 Pv Pioneers 0719 Pr
Ecmweb 25244 Pv Pioneers 0719 Pr
Ecmweb 25244 Pv Pioneers 0719 Pr

PV Pioneer

July 18, 2019
With a new state mandate on the horizon, California will become first state to require rooftop solar for new-home construction in 2020.

Another day is about to dawn in California’s push to be on the vanguard of renewable energy deployment, and once again all eyes are on that Big Star that ushers it in. Beginning Jan. 1, 2020, most new residential structures in the state must be built to use solar energy for electricity from day one — a mandate that takes the Golden State another stride down what is shaping up to be a path to a fossil fuel-free future.

The solar requirement, folded into the 2019 update to California’s Title 24 Building Energy Efficiency Standards, marks the first time any state has put broad restrictions or prescriptions on how new homes are powered. With some exceptions, it requires new or extensively renovated single-family or multi-family structures three stories and under to have fully functional rooftop solar photovoltaic (PV) panels or be tied into community-scale solar PV arrays. The systems must be sized to provide all a structure’s electricity needs — enabling zero-net electricity status as opposed to zero-net-energy, because there’s no mandate for the required blend of fully electric design or other energy-saving home features that could achieve that.

New-home solar requirements could slow solar retrofit work, shown here.

In a state the size of California, the rule has the potential to move the needle on renewable energy deployment. Estimates vary, but most put new single- and multi-family home construction in the state at well above 100,000 units annually for the next several years. Many of those new homes, however, single-family notably, would have incorporated solar in any event; the state is already a leader in new-home solar.

But residential is still a small part of the overall market for deploying solar, as commercial, industrial, and institutional sectors together comprise a much larger and more consequential energy usage block where solar penetration has been minimal. Factoring in existing home solar retrofits, the California residential component is still not insignificant, and its impact is likely to grow as the state’s population swells. Some estimates have the mandate helping push total residential solar deployment in the state up 15% to 30% annually for the next few years.

“The new-home segment is a comparatively small portion of the market, and while the number of installations could double, those systems will be smaller, and homes they’re put in will be more energy efficient,” says Benjamin Davis, policy associate with the California Solar & Storage Association, Sacramento, Calif. “But this will be a boon for the residential solar market.”

A worker secures solar panels to an existing home’s roof.

Taken alone then, this new clean energy measure won’t shake the ground under the overall solar market in California. Assuming it stays in force, though, it will clearly lead to a prolonged increase in locked-down solar PV installations. And that will have ramifications not only in the context of California’s renewables push, but also in terms of business opportunities for solar PV products, installation and service providers across the state. Additionally, the mandate could also end up spurring copycat legislation in other progressive states, resulting in wider deployment of residential solar across the country over time and concurrent growth opportunities for installers.

An Expanding Base

Although they present a different and perhaps easier installation challenge compared to existing home solar PV retrofits, new-home solar installations are hardly new. The Orange County (Calif.) Register reported that state building permit records indicate solar panels may have been put on some 115,000 new homes built in the state in 2017, half of which were single-family. That works out to about 20% of all new homes built equipped with solar. But the all-encompassing scope of the new standard translates to some new challenges for homebuilders in terms of how they get it done. From how it’s incorporated into home designs to who does the work to how it’s accounted for in a home’s price, residential solar on a much broader scale amounts to change that will affect developers, builders, architects, solar installers, and electrical contractors.

Builders and developers, of course, will shoulder the initial burden of determining the mechanics of outfitting homes with solar. That’s long been the case for custom, production, and spec builders. While specific approaches vary, the typical builder contracts with a solar installation company. Systems are designed and installed based on structure size and anticipated energy load, an approach that oftentimes amounts to a one-off build for each home, like the dynamics of the retrofit market. That’s especially true with custom homes, whose size, structural features, and amenities usually dictate specialized designs.

Now, with solar required on all new residential construction, spec builders, some of whom might have had minimal experience with solar, will be in the spotlight. Many though have begun integrating solar, and their task will involve simply doing more of what they’ve been doing .

Solar panel arrays are becoming a more common sight on new and existing homes.

“With the larger homebuilders, the solar companies with a national profile are the ones who have a foothold in doing this type of work, companies like SunPower and SunRun,” says Phil Edwards, president of Jamar Power Systems, a Santee, Calif.-based electrical contractor that has had a full-line solar business since 2001. “Companies that are willing to sacrifice profitability for growth makes it hard for electrical contractors like us to break into that space.”

And those firms’ clout could only grow stronger, now that builders are on the hook for solar. With more volume, the dominant players who work with builders could get bigger, further squeezing out small companies from the broad new-home solar market as well as weakening direct competitors.

Goldman Sachs analyst, Brian Lee, told financial publication Barron’s recently that SunPower is notably well-positioned to capitalize on the solar mandate, perhaps seeing half the new market the directive creates fall into its lap.

Still, Edwards says Jamar and other smaller solar installers could see a lift as well. While performing electrical work for homebuilders, the company lands some solar work already, and those opportunities could increase. Additionally, the company sometimes works as a subcontractor for large solar installers — business that could also expand as installers are spread thinner and look to local providers to fill in. A workforce that has some electricians cross-trained in solar provides needed flexibility to take on jobs.

Wiring on an existing home directs electricity generated from solar panels to inverters. 

“It’s not logical for a local electrical contractor to try to allocate the resources to go after the new-home market on a large scale, but it can be difficult also for a large installer based, say, in San Diego, to take on a project in Orange County,” he says. “And if we’re already doing the wiring for a builder as an electrical contractor, we can offer up those solar services.”

Impact on Retrofits

The market for new-home solar, though, will still be competing for available installation resources with a robust retrofit market in California; Davis says about 100,000 existing California homes were converted to solar in 2018. Demand for the latter could turn down as existing homeowners realize they can more readily get solar with a new home. Retrofits will almost surely account for a smaller share of installed residential solar over time given the mandate, but that work certainly won’t dry up. It might even offer better margins for some installers than assembly-line style new home projects.

Solar panels ready for installation are shown here.

But the new-home solar market comes with a built-in advantage for installers, says Ben Airth, senior renewables project manager at the California Center for Sustainable Energy. Since the house is designed from the ground up for the solar system, there’s no time-consuming challenge of trying to wedge a system into an existing home’s electrical infrastructure — work that can include upgrading a home’s electrical service panel and finding pathways for conduit.

“It’s easier to install a system on a new home than in a retrofit,” he says. “It’s not that it’s particularly hard, but there are a lot more issues.”

That work will still be in demand, particularly if new home construction struggles to keep pace with the state’s population growth, so installers will be tugged in both directions. Many builders, though, have forged relationships with solar providers, and that should help ensure needed work gets done efficiently. Still, Airth says, supply could be challenged.

“The retrofit market will continue to grow unless the state removes the value mechanism of net energy metering, so the entire residential solar market is one that will need more contractors,” he says.

Homebuilder Strategies

As homebuilders gear up to comply with the new blanket solar rule, more creative approaches could start to take hold. Some could follow the lead of Lennar Homes and bring the solar component in-house. Through its SunStreet subsidiary, Lennar builds the solar array into a home’s roof, and electrical connections are completed as the house is constructed — a model that could be marketed directly to or replicated by other builders looking for efficient ways of meeting their new solar obligations. Others might adopt an approach in limited usage where niche roofing specialists take on some or all the installation work, maximizing their central role in the construction process. Similarly, still others might look to their electrical contractors with the requisite solar PV skills, experience, and reputation to manage that part of the building job.

What’s more likely is that homebuilders will continue to pair up with solar installation professionals that can also handle the sometimes-knotty financing aspects of the work. They’ll replicate approaches like that of DeYoung Properties, a Fresno, Calif.-based homebuilder that three years ago committed to putting solar in all its new properties in the state via a partnership with solar panel supplier and installer Tesla. Its systems can be purchased outright by the buyer, or they can enter into a 20-year, zero-down lease that can be assumed by subsequent buyers.

DeYoung’s solar commitment coincided with a bid to push deeper into the zero-net-energy home concept. In 2017, it launched its first grid-connected ZNE community, consisting of highly energy-efficient homes powered by solar PV sized to offset not only the amount of electricity sourced from the grid, but also any energy supplied by natural gas used in the home. Now the company has three ZNE developments in California’s Central Valley, and more are being planned.

ZNE may be too far a leap now for many new home builders in California, and it’s not an outcome the new rule ensures. However, Brandon DeYoung, DeYoung’s executive vice president, says solar shouldn’t be a big hurdle for most homebuilders, given California’s leadership in solar, its regulatory support, and the state’s installation infrastructure. Its added costs may be a factor for builders aiming for a specific price point in the market, he speculates, but demonstrable long-term utility cost savings should overcome that.

“In our area, my gut feel is that over half the new residential construction is already getting solar,” he says. “For what the code requires, it won’t be a big issue, but some builders might still be in a state of some hesitancy on how to do this.”

Size Will Vary

Some estimates have new residential-construction solar PV systems coming in at between 2.7kW and 5.7kW, an amount that will vary depending on the home’s location and energy efficiency. That compares with the California Energy Commission’s (CEC’s) estimate that the average solar home has a system sized between 2.5kW and 4kW, and another estimate that an average home retrofit system in the state is 6.8kW. For new homes that must comply, the solar mandate will tack on an average of $9,500 to a builder’s costs, according the CEC data. Over three decades, though, CEC predicts those living in that typical home could reap savings of $19,000 in energy and system maintenance costs.

Solar installation business prospects that come with the new rule might be complicated by its provision for community solar. That’s an option that some homebuilders might exercise to hold down labor costs. But it also complicates the homeowner’s ability to take advantage of net metering that allows utility billing credits for solar energy production. That would make new-home solar a less marketable feature.

“Community solar doesn’t provide the same value that rooftop solar has, and we don’t have 10 years of knowledge built up with it,” says Airth. “It’s an idea, but the policy mechanisms aren’t in place well enough to make that happen.”

Another wrinkle in the requirement could add to the complexity — and possibly attractiveness — of solar installation projects. It permits installation of battery storage for solar electricity to reduce the size, and thereby cost, of a home’s system by up to 25%. And it’s also an eligible substitute for other new-home energy efficiency features proscribed in the new standard. With storage, users could bank excess electricity produced by solar and call on it rather than grid power during high usage periods, helping utilities better manage peak demand.

With California utilities on track to begin implementing time-of-use rates, storage could buttress the long-term investment value of residential solar, Davis says. At some point, the energy efficiency standard could be rewritten to make it mandatory. Meantime, it’s something builders will weigh.
“The cost of a storage system depends on system size and other factors,” he says. “So, it’s hard to tell how much that option will be used by builders.”

But options and flexibility are what builders sought as groups like the California Building Industry Association worked with the CEC to craft a rule they could live with. The new-home solar requirement will be an added burden for them, but there’s almost certainly recognition that solar will grow to become a more highly valued home feature in the state. Their challenge will entail finding ways to incorporate it professionally and efficiently on a larger scale than normal — one that will call on the talents of subcontractors like solar specialists and electrical contractors. A new opportunity beckons that further strengthens the foundation for a future where solar as the residential energy centerpiece could become the rule rather than the exception.    

Zind is a freelance writer based in Lees Summit, Mo. He can be reached at [email protected].

Sidebar: Solar Requirement Touted as Path to Improvements

California’s requirement for new-home solar could be a test case for a theory that such a mandate, broadly implemented, could help unlock solar’s full potential.

A December 2018 report by Environment America Research & Policy Center ― Solar Homes, The Next Step for Clean Energy ― says incorporating solar into new homes as a matter of course could produce a cascade of benefits for homeowners, utilities, builders, installers and the environment. The argument’s essence is that the only way to maximize solar’s performance and impact is to design and build homes for it from the start. And the quickest way to get there is to follow California’s lead.

“Installing solar energy when a home is first built reduces solar energy’s costs and creates the potential for new business and technological innovations,” the report states. “Knowing that solar panels will be installed in a home from the start allows the home to be designed to maximize solar energy production and use.”

A critical mass of new-home solar mandates, the authors write, would steadily fuse the interests of builders and solar installers. “Soft” costs that make up two-thirds of rooftop solar’s costs ― like marketing, permitting, inspection and installation ― could be reduced with closer cooperation. Designs costs could fall, too, with advancements in standardized models of home energy systems.

With solar accounted for in design, roof configuration and solar panel placement would be optimized, producing better system performance.

“The angle of the roof, the direction it faces, and the amount it is shaded can all be optimized for solar energy production,” the report states.

A home’s electrical infrastructure can also be better designed and installed to accommodate solar: “Knowing that solar panels will be installed also enables builders to ensure that homes’ main circuit breakers have the right ratings to accommodate solar energy systems, and that the installed conduits from the inverters to the panels are placed to reduce losses from energy transmission.”

Not losing sight of the big picture, the report states the obvious: The more that states or jurisdictions mandate solar in new construction, the higher the percentage of new housing added every year will be solar for years to come. And it would be a ready vehicle for giving solar a firm foothold in the market.

“Installing solar panels on all new homes built from 2020 to 2026 would result in more solar power capacity than the entire U.S. currently has installed,” the authors write.

    

About the Author

Tom Zind | Freelance Writer

Zind is a freelance writer based in Lee’s Summit, Mo. He can be reached at [email protected].

Voice your opinion!

To join the conversation, and become an exclusive member of EC&M, create an account today!

Sponsored Recommendations

Electrical Conduit Comparison Chart

CHAMPION FIBERGLASS electrical conduit is a lightweight, durable option that provides lasting savings when compared to other materials. Compare electrical conduit types including...

Fiberglass Electrical Conduit Chemical Resistance Chart

This information is provided solely as a guide since it is impossible to anticipate all individual site conditions. For specific applications which are not covered in this guide...

Considerations for Direct Burial Conduit

Installation type plays a key role in the type of conduit selected for electrical systems in industrial construction projects. Above ground, below ground, direct buried, encased...

How to Calculate Labor Costs

Most important to accurately estimating labor costs is knowing the approximate hours required for project completion. Learn how to calculate electrical labor cost.