A Closer Look at California's New Solar Energy Option Mandate

The version of SB1 that was signed by the Governor on Monday -- as opposed to efforts in '05 and '04 -- struck a successful balance between competing factions on the issue of solar mandates for new homes by requiring that homebuilders of housing developments over 50 units in size offer solar energy projects as an "option" on new homes.

The solar community as a whole is delighted to see the bill finally pass the legislature. It includes some key provisions necessary to advance solar in the state and to strengthen a related plan approved earlier in the year by the state's Public Utilities Commission (PUC).

Perhaps most importantly, SB1 raises the net-metering cap in the state, which was approaching its limit. It also levels the playing field among public utilities and municipalities like the LADWP by requiring the "munies" to create their own solar rebate program in concert with the state's solar programs. There are serious questions, however, about one component of the bill: whether the option mandate for solar on new homes will have any real effect.

"It's a step in the right direction but it doesn't really get us too far along," said Les Nelson, Executive Director of the California Solar Energy Industries Association. "Originally this was to be a mandate. Of course, the building industry hates mandates of any kind. So, in order to avoid their opposition it got reduced to a "must offer" option."

The bill's language regarding the option mandate is brief. It states simply that "beginning January 1, 2011, a seller of production homes, as defined, to offer the option of a solar energy system, as defined, to all customers negotiating to purchase a new production home constructed on land meeting certain criteria and to disclose certain information."

There is a separate item in the bill that directs the California Energy Commission to determine if and when solar power should become a standard feature of new construction. Nelson sees this as quite promising. But regarding the solar option mandate, he's concerned that it's too weak and vague. In one worst-case scenario, Nelson says the option mandate could devolve as much as builders and home-sellers simply being required to hand out a small brochure at the final signing stage with a customer.

"We've had options in the past and the only one that gets the solar is the model home. In terms of it having a huge impact, the mandate offer as an option will not get us very far," Nelson said.

Furthermore, Nelson cited research from the National Renewable Energy Laboratory (NREL), based in Golden, Colorado, which found that home sales personnel are poorly positioned to sell solar because of the quick turnaround associated with their positions. In addition, they're generally not interested or motivated to sell anything else but the home.

"The sales people understand countertops, and wood flooring but they don't understand solar so they just don't focus that much. They're in the business of selling homes, not solar systems."

Aaron Nitzkin, VP of Solar Operations for Old Country Roofing, acknowledges that solar has not done well in the past as an option mostly because the operating costs of their home are quite low on the list of priorities when considering a new home. He thinks that's beginning to change, though, as energy prices continue to squeeze pocketbooks in California and all across the nation.

"Five years ago no one buying a car thought about operating cost," Nitzkin said, referring to the days before three-dollar-a-gallon gasoline. "Now I see homes going that way. I could see electric bills, in some regions, going higher than some mortgages. There is a shift that's beginning to take place."

Nitzkin, who recently joined Old Country Roofing to incorporate solar into its roofing business, says a combination of high energy prices and SB1's new solar option mandate should be a wake-up call to the building industry that solar will play a much stronger role in new home construction in the future. And while there's no great rush since the mandate isn't in effect until 2011, he believes builders should get started now because such a move cannot be done overnight.

"Builders have a herd mentality. They don't like to change until they have to, but when they do, they all go with the flow," Nitzkin said. "We're getting to the tipping point where they will accept solar is inevitable and they will have to figure out how to incorporate solar into their practices. That's where it really gets exciting."

Someone else with a good idea about what the building industry might do is Bob Raymer, Technical Director for California's Building Industry Association (CBIA). He says there are already a number of builders that are waiting and planning for solar to eventually be a standard option on homes.

He says the CBIA strongly supported the Million Solar Roofs bill, specifically its latest incarnation this year that lacked some hard-to-swallow components such as so-called "prevailing wage" or what he termed "severe" contractor restrictions.

The real test of the bill's success, Raymer says, will be whether the overall prices for solar energy go down by the time the mandate goes into effect in 2011. Solar projects in the state, whether they're part of any homebuilder program or not, will be eligible for rebates from the state over the next ten years through a related plan recently approved by the CPUC (see related stories at the links below).

"If we get to 2011 and solar has become cost effective, then people will want this on their homes anyway, and they won't have to wait for a pamphlet to be handed to them to find out," Raymer said.