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California Takes Big Step to Require Solar on New Homes

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Solar panels adorn a home in the Los Angeles community of Topanga. The California Energy Commission approved a requirement that residential buildings up to three stories high have solar panels from 2020 onward.
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mike nelson/EPA/Shutterstock

California took a major step Wednesday toward becoming the first U.S. state to require solar panels on nearly all new homes.

The California Energy Commission voted 5-0 to approve a requirement that residential buildings up to three stories high, including single-family homes and condos, be built with solar installations starting in 2020.

The commission estimates that the mandate, along with other energy-efficiency measures being incorporated, would add $9,500 to the average cost of building a home in California. The state is already one of the most expensive housing markets in the country, with a median price of nearly $565,000 for a single-family home, according the California Association of Realtors.

Still, the change appears to have broad support from home builders as well as state leaders and solar advocates. Part of an update of the state’s energy efficiency building codes, it needs final approval from the California Building Standards Commission. But that panel has traditionally adopted California Energy Commission recommendations, officials said.

The policy would provide a big boost to California’s residential solar industry, which saw a slowdown last year

An Energy Commission study forecasts that overall solar demand in California would rise by as much as 15%, given that California’s low-rise residential housing stock increases by about 2% annually.

Representatives for solar installers including

Sunrun Inc.

and

Tesla Inc.

spoke Wednesday in strong support of the rule.

Francesca Wahl, a senior policy associate at Tesla, said the company sees the adopted revisions as “a good pathway for the industry to drive down costs,” as well as help increase efficiency and provide savings to customers.

California is pursuing aggressive policies to reduce air pollution and combat climate change—including a mandate to slash greenhouse-gas emissions 40% below 1990 levels by 2030—that are helping drive renewable energy in the state.

Solar accounted for nearly 10% of California’s electricity generation in 2016, Energy Commission data shows.

The state already requires home builders to construct residences that can immediately accommodate solar power arrays, while several cities, including San Francisco and Santa Monica, have instituted solar requirements for newly built homes and buildings.

“To get to a decarbonized economy in California we need massive expansion of solar and other renewable energies,” said State

Sen. Scott Wiener,

 a San Francisco Democrat who proposed legislation last year to mandate solar on rooftops, but backed off in light of the Energy Commission’s efforts.

Currently, about 20% of new single-family homes in the state are built with solar, said Bob Raymer, senior engineer with the California Building Industry Association, which represents thousands of home builders, contractors, architects and others. Making solar mandatory on homes is expected to add $8,000 to $10,000 to construction costs, he said.

While the building-industry organization would have preferred the Energy Commission hold off a few more years on mandating that homes be fitted with solar, it helped shape the rule to reduce compliance costs and increase flexibility, Mr. Raymer said. Builders would have the option to install solar in a communal area if it doesn’t make sense on individual rooftops. By installing batteries that help homeowners save energy for later use, builders can also gain some flexibility in meeting efficiency standards. 

“Adoption of these standards represents a quantum leap in the statewide building standards,” Mr. Raymer said. “You can bet every one of the other 49 states will be watching to see what happens.”

The California Housing Partnership, a nonprofit group that advocates for affordable housing, hasn’t taken a position on the solar rule. Stephanie Wang, the group’s policy director, urged state leaders to invest in programs that “make energy more affordable for the Californians who are most vulnerable in our housing crisis.”

California has more solar power installed than any other state, with about 21 gigawatts of generation capacity, according to the Solar Energy Industries Association. That is far more than the second-largest solar-producing state, North Carolina, which has 4.3 gigawatts.

Energy Commissioner Andrew McAllister said the solar rule was just the latest step in California’s decadeslong effort to increase energy efficiency and renewable energy use.

The commission expects the cost of adding solar, when combined with other revised efficiency standards, to add about $40 to an average monthly payment on a 30-year mortgage. However it estimates the investment would more than pay for itself, with consumers on average saving $80 a month on heating, cooling and lighting bills.

“The buyer of that home absolutely gets their money back,” Mr. McAllister said. “Out-of-pocket, they are actually better off.”

Abigail Ross Hopper, chief executive of the Solar Energy Industries Association, said California’s action would demonstrate to policy makers in other states that promoting home solar makes sense.

“The impact it could have in California and the impact it could have around the country will be significant,” she said. “It’s going to be a really big deal.”

Write to Erin Ailworth at Erin.Ailworth@wsj.com

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