– Starting in 2020, new homes, like these currently under construction in the Riverstone, a master-planned community being built in Madera County, will be required to include solar panels to provide some of their electricity.
Written by David Castellon
The requirement for new homes in California to be built with solar panels still is just under a year-and-a-half away, but it’s weighing on the minds of people in the home-building industry.
Solar installers in the state are far less concerned, as they stand to collectively reap billions of dollars in added business from the new requirement.
“For the industry, it would be good news,” said Ty Simpson, regional sales manager for the Fresno office of Bland Solar.
“The region is prepared for it, for sure. There have already been homebuilders who have already mandated solar, and Fresno is—depending on what metric you use—the number-one solar market in the country.”
Still, many solar installers here may not have the manpower to handle the extra work once the new building code takes effect on Jan. 1, 2020, Simpson said.
Finding installers to fill the new jobs expected to be generated isn’t likely to be a problem, at least in the Valley, he noted.
In Fresno alone, there are at least 80 solar-installation businesses, so many in fact that some recently have gone out of business, in part because there were too many to meet current demand for solar work. Those people who lost jobs should mostly be available to take on some of the new jobs coming in a year-and-a-half, Simpson explained.
“Given Fresno is having so many [solar] contractors in town, you would not have to go outside the area to find talent. Same for the rest of California.”
And even among people not already trained to work in the solar field, there likely will be considerable interest in landing such jobs, as trainees and novice installers generally can earn pay in the low $20-per-hour range, while fully-trained, experienced installers can make $35-$40 an hour, Simpson said.
But even for solar businesses, the new solar rules could come with some problems, said Simpson noting that the larger homebuilders could seek bids for large developments that require interested solar installers to significantly cut their profits, and if the jobs are big enough, at least some likely will do that.
“Is it worth cutting the [profit] margins in half for 500 homes, or would I rather do 100 homes for the full margins,” Simpson asked.
“It’s not a slam dunk for the builder or the solar contractor,” he said of the new home solar panel rules, which could end up having too many red flags and red tape for both sides.
Among residential builders and developers, concerns about the rules existed well before the California Energy Commission announced them back in May.
Officials with the California Building Industry Association said they knew a requirement for solar panels was inevitable, so rather than fight it they worked with the CEC to make the rules less onerous for homebuilders.
Among the concessions favoring builders was that no set number of solar panels will be required on each home, which is important because many home—particularly smaller ones—have small roofs that can’t fit many panels, while some homes are configured in such a way as to limit space for panels, said Michael Prandini, president and CEO of the Building Industry Association of Fresno/Madera Counties, part of the statewide BIA.
Still, builders worry whether the added cost of a solar system—which building and real estate experts have estimated could generally range from $10,000 to $30,000 or more—could price some people out of buying new homes, particularly those who can only afford lower-end homes and don’t have much wiggle room in their budgets.
And fewer people being able to afford homes could hurt demand and stifle the number of new homes constructed, the builders said.
“Well, I’m not a big fan of it. In general, I don’t think Sacramento should force people to buy products,” added Vic Breedlove, owner of Madera Roofing, Inc. in Madera.
“When you are forced to buy a product, the prices will escalate,” and manufacturers of solar equipment may raise prices in light of the added demand for their products, further adding to the costs of new homes, he said.
“California wants to be the greenest state and lead,” Breedlove said. “But it just seems the more they try to impose legislation, it’s not helping.”
He noted that there already is a shortage of labor across the home-building industry, and adding to the solar requirement will not help that.
“As it is right now, roofers don’t install the panels, at least not the ones I do,” which includes work for large home developers that include Lennar Homes, McCaffrey Homes and Bonadelle Neighborhoods, Breedlove said.
Yet he recently received a call from a solar company.
“What they wanted from us was to pay us to install the panels, which I declined. We’re busy enough keeping up with installing roofs. We don’t need or have time to install solar panels.
“I just think the solar companies are trying to get ahead of this. They see they will probably not have enough labor to keep up with the demand,” Breedlove added. “
“Nobody knows what to expect,” though the odds of losing some would-be buyers seems likely, Prandini said, explaining that “people tend to buy at the peak of what they can afford, so when they can afford a $300,000 home and it goes to $310, 000, it makes them reconsider.”
Brian Ennis, owner of Ennis Builders, Inc. in Porterville and a developer of housing subdivisions, agreed, saying, “Solar panels have always been a discretionary option. People with discretionary income were the ones who purchased solar panels,” and because of that added cost, many homebuyers don’t tend to want them.
And even the selling point that the savings in electric bills will eventually pay for the panels often isn’t a great one, he said, noting that “Unless you have the money, it doesn’t really make sense because the break-even point is so far in the future, it extends beyond the break-even point—13 to 15 years,” whereas people tend to move from the first homes they purchase, on average, at about the eight-year mark.
And while lease-to-own solar systems are options over buying them outright, those leases can run 20-30 years. If people sell their homes before those leases run out, whatever is owed on the solar systems usually has to be paid off from the proceeds of the home sales, rather than the new owners taking over the leases, said Ennis, whose business includes real estate services.
And the added cost from the solar panel requirements will come on top of other new, recent rules in California that already are elevating construction costs, which includes adding home sprinkler systems and installing insulation in attics directly under the roofs, an addition to the previous requirement that just the floors of attics had to be insulated, he said.
While there is no doubt the added costs to build homes will worry some buyers, Steve Bricker, owner of Bricker Construction, Inc. in Madera, said he believes that after the new solar rules take effect, there will be a “learning curve” for buyers to accept their new homes needing solar and the added costs involved, much like accepting the added costs of air bags in new cars.
And rather than foregoing buying new homes, Bricker said he believes people generally will look to make up the cost differences in other ways, including building or buying smaller homes, or including fewer high-end cabinets, counter tops flooring and other features in them, particularly buyers at the bottom of the affordability ladder.
“Unfortunately, the ones at the bottom are the ones going to be affected the most.”