California must use the sun to reduce greenhouse gas emissions—and recognize there’s more than one way to do that

Consumers need flexibility to choose what type of home best fits their needs. Homebuilders need adequate options to provide this flexibility.

That’s why we are watching how California lawmakers navigate the reduction in greenhouse gas emissions they’ve mandated and their effort to increase housing production.

Energy standards adopted by the California Energy Commission require new homes and low-rise apartment buildings to be powered by renewable energy. 

The energy commission’s 2020 requirement for a “renewable energy component” is not limited to solar panels on the roof of every new home.  Recognizing California’s goal of providing housing for all, the commission’s standards provide the homebuilder with three very different compliance design options, for a range of housing types:

• The “For-sale” option, in which the builder installs rooftop solar and sells it to the homebuyer along with the rest of the home.
• The “lease” option, a third-party solar provider installs solar panels on the homebuyer’s roof. The third-party solar provider would own and maintain the rooftop system, and enter into a 20-year arrangement with the homebuyer to provide a certain amount of electricity for a reduced rate. 
• The “Community Solar” option, in which the builder complies with some or all the renewable energy mandate using solar energy produced at an off-site facility.  Unlike the previous two “rooftop options,” the energy commission must certify a community solar farm before it can be accessed by a builder.

Even though the standards were adopted almost two years ago, a fight is developing over the energy commission’s pending approval of the first community “solar farm.”

Specifically, the potential of developing a shared solar farm, rather than installing panels on individual roofs, would be made available to builders in the Sacramento Municipal Utility District territory. 

As the utility district’s Solar Share community solar program has moved forward in the energy commission’s approval process, there is significant opposition from interests who only support rooftop systems.  

While the concerns varied, the most common objection centers on the assertion that homebuilders will gravitate to the utility district’s Solar Share program due to its low-cost, and in doing so, homebuyers will not receive the full benefit of the solar system.

This is simply not the case.  

Prior to the statewide solar mandate taking effect, a very strong market existed for rooftop solar. And thanks to PG&E’s recent power shut offs and rate plans that vary according to the time of day, more consumers are seeking access to rooftop solar and home batteries.

When it comes to renewable energy, however, one-size-does-not-fit-all. In California, multifamily construction has overtaken single-family home construction. 

A three-story apartment complex may not have enough rooftop area available to meet the energy commission’s mandate. Further, housing aimed at low-income buyers may not be able to absorb the up-front cost of $10,000 associated with rooftop installation.

In these very common cases and others, homebuilders will be looking for off-site sources of renewable energy to meet the state’s new solar mandate. Availability of a community solar option will help industry deal with these design constraints while at the same time helping the state meet its greenhouse gas reduction goals.

The energy commission rightfully saw fit to allow alternatives to rooftop solar. For some consumers, solar panels on their newly constructed home is the right choice. For others, on-site or off-site solar energy is the best to fit their needs.

California’s homebuilders need a wide array of options to meet California’s diverse housing needs while meeting the requirement for a renewable energy component for all new dwellings.

As such, the California Energy Commission should approve the Sacramento Municipal Utility District’s Solar Share program at its February 20^th meeting.

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Michael Wyatt is California Regional President for K Hovnanian Homes, MWyatt@khov.com. He wrote this Commentary for CalMatters.

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