California has officially become the first U.S. state to require new homes to have rooftop solar panels, a major milestone in the Golden State’s hugely ambitious goal to shift all energy usage to 100 percent zero-carbon sources by 2045. But some economists doubt the rooftop rule will prove the most cost-effective way to cut greenhouse gas emissions for California—or other states seeking to address the human impact on climate change.
The requirement is part of new building energy-efficiency standards the California Energy Commission (CEC) passed earlier this year. New homes under the revised building code—which takes effect starting in 2020—will use an estimated 53 percent less energy than existing homes built under 2016 standards, and could cut the state’s greenhouse gas emissions by about 700,000 metric tons over three years, according to CEC estimates (pdf). The California Building Standards Commission officially approved the measure on December 5. “It will curtail greenhouse gases,” says Severin Borenstein, an energy economist at the University of California, Berkeley. “It’s just a very expensive way to do it.”
Borenstein and other skeptical energy economists—although acknowledging rooftop solar on new homes will help—argue more cost-effective strategies exist and could also provide better models for other U.S. states or countries seeking to cut emissions.
A Drop (or More) in the Bucket
The estimated direct impact of California’s rooftop solar initiative is not zero, but in some ways it barely budges the needle. That figure of 700,000 metric tons of emissions over three years is far less than even 1 percent of the state’s annual emissions (which total about 440 million metric tons), said Ethan Elkind, an attorney and director of the climate program at the Center for Law, Energy and the Environment at U.C. Berkeley, in an interview with California Magazine.
Looking at it another way, the estimated emissions reduction would have approximately the same impact as removing 115,000 fossil-fuel cars from California’s roads. That comparison would still amount to slightly less than half a percent of the more than 25 million cars registered in the state.
Many energy economists say the rooftop solar mandate will prove less cost efficient than building more solar and wind farms to pump grid-scale renewable energy into the overall power-distribution infrastructure. Borenstein’s U.C. Berkeley colleagues estimate solar farms in ideal locations—and with tracking technology to continuously face the sun, unlike fixed rooftop panels—could prove three times cheaper than rooftop solar. “California should be creating the knowledge and models that the rest of the world can follow,” Borenstein says. “This is a bad model that is raising the cost of reducing greenhouse gases.”
California could also do more to reduce emissions by easing vehicle reliance on fossil fuels, says Garth Heutel, an economist at Georgia State University who specializes in energy and environmental policy. Emissions from homes accounted for just 7 percent of California’s overall greenhouse gas output in 2016, whereas transportation contributed a whopping 41 percent of all emissions.
The CEC has defended the rooftop solar requirement (pdf) as part of a broader strategy to reduce emissions from the building and transportation sectors. Unlike grid-scale solar farms, rooftop panels provide onsite power to homes in way that does not require additional land or supporting infrastructure, the commission points out. It adds that rooftop solar’s distributed power approach could strengthen the grid’s resiliency against power failures, natural disasters and wildfires.
Who Pays the Costs?
Requiring rooftop solar panels may also raise upfront costs for California homeowners at a time when San Francisco and other cities already struggle with the lack of affordable housing. The CEC estimates the new standards—which also include energy-efficient lighting upgrades—will raise the cost of new home construction by about $9,500, but could save $19,000 in energy and maintenance costs over a 30-year mortgage. The situation may end up favoring wealthier home buyers who can afford the upfront costs and will save money in the long run, Borenstein says. “Could there be better, more cost-effective and cheaper ways to reduce emissions—ways that avoid unintended consequences like the impact on the affordable housing crisis in California?” Heutel says. “Yes.”
But that upfront cost need not deter new home buyers, said Drew Bohan, executive director of the CEC, during a recent meeting of the Building Standards Commission. The new standards allow homeowners or builders to use power-purchase agreements or leased solar options with little or no upfront costs—all while harnessing electricity bill savings from day one. There are even exemptions for new building projects where shade or unusually low electricity prices would not make rooftop solar cost effective.
If the state enacts the right policies, supporters say rooftop solar panels could spread clean energy benefits beyond just Californians who can buy expensive new homes and drive Tesla cars. For example, California’s cap-and-trade program—which since 2013 has required companies to buy emissions permits—is mandated by law to spend some revenue on socially and environmentally disadvantaged areas. That could help subsidize low-income families so that they, too, can buy new solar-powered homes and electric vehicles, says Dan Kammen, an energy policy specialist at U.C. Berkeley.
Construction companies will likely offer rooftop solar options that both power homes and recharge homeowners’ electric cars, Kammen says. That could encourage more Californians of all backgrounds to buy electric or hybrid vehicles, thus reducing transportation emissions. “We need to make sure the benefits of solar and electric vehicles go to low-income people,” he says. “To my mind, we will not succeed in a clean-energy transition unless it’s inclusive of specifically all low-income families.”