California Passes Controversial Solar Panel Requirement for New Homes
How can mandating energy producing solar panels on homes in sunny California be a bad thing? When it’s done at a time of severe housing shortages, 30% import duties on solar panels, and when the extra cost stops thousands from buying a home.
The new law will have an impact on the California housing market. The cost of solar panels and systems could push the average house price up almost $10,000. That means home mortgages may grow by $40 a month, yet homeowners will save $80 on monthly electric bills. That’s not a bad deal.
Will Rental Prices Rise?
The new solar power rule will push some rental property prices up although high rise apartment prices won’t be as deeply affected. However, with fewer people buying homes and condos, they will be staying in their apartment rental units. Some rental property owners should benefit from the new law.
As a residential property investor, owner, manager or landlord in California, you might be thinking this looks like one more potential maintenance task in your day. And property management companies must manage these technical and mechanical issues all the time. But what if solar power systems are a value add or a business opportunity for owners and investors?
See our posts on the rental housing market, apartment prices, California housing market, and the best property management apps.
Home Solar Power Systems in California: 2020
The California Energy Commission passed the law with its recent vote and it will come into effect in 2020. Curently, 1 in 5 new homes comes with solar panels. Starting on January 1st, 2020, new homes or condos in buildings 4 stories or less must include solar energy systems with an output of 2 to 7 kilowatt hours per day.
The previous Solar Energy Rights Act of 1978 (that’s right, 1978) allowed apartment building owners the right to install solar panels on roofs and on adjacent buildings and garages despite attempts by HOA’s to prohibit them.
A further new law just passed called AB 634 prohibits HOA’s from stopping the use of solar power systems. NIMBYism is still an issue in California.
Those in the multifamily housing sector will be interested to learn more of the advantages of solar power.
Solar Powering a Revolution
The collective electricity produced by all of these solar powered new homes could reduce California’s power burden by 40%. It will help the environment and likely lower electric power costs for everyone by reducing demand on the power grid and perhaps feeding power back in. One director for an environmental group called it a big win for the state.
US solar panel systems manufacturers listed on the stock market saw their stock values rise as much as 6% on the news. Tariffs on Chinese solar panel makers makes US manufacturers more competitive.
Solar jobs are a big benefit too. Some suggest solar is generating more jobs now than any other industry.
We’d be pleased if you shared this post with your friends on Facebook and Linkedin. Residential Solar power is a growing trend with loads of possibilities! Let us know your thoughts.
California is Using More and More Power
Is this news relevant to rental property managers and owners? Well, what if your property created power to sell to renters to power air conditioners, refrigerators, clothes washers, ranges, televisions, lights, kettles and coffee makers, and to heat water for showers?
As the above graphic from BLS shows, California has a higher than average cost of electricity at about 19 cents per kilowatt. Los Angeles households use about 10000 to 12000 kilowatt hours per year. That translates to about $1000 to $1200 per year.
However, with a roaring agricultural and manufacturing industry, and electric cars coming into wider use, power demands will rise. And electric vehicles require a lot of power. Renters with electric cars might be drawn to the value of getting power at a lower price than the utility companies charge.
Don’t Forget Electric Cars: They Need Power
The average estimate for the cost of powering an electric car for 15,000 miles per year is about $700. For a long distance commuter driving a heavier EV, it would likely be 1500 per year or more.
Total power bill for the modern Californian? About $1700 to $2700 per year. If the household has 2 to 3 EVs, the electrical consumption could be upwards of $7000 per year.
How Much Power Can a Residential Solar Power System Generate?
The question that has to be asked is, how much power can a home solar system generate? There’s widely varying estimates based on the system and how many panels are installed.
Each solar panel can deliver about 550 kilowatt hours of power each year. California is sunny and should achieve a higher power output than eastern states. If you have 20 panels in your home/yard/walls you might potentially capture 5,000 kilowatt hours of electricity. That’s about $1000 of value in power for a typical home over a year.
A large home could easily have room for 50 solar panels on its roof
If there is room for more panels, lets say in a larger estate or inland area home with more space, a larger system could produce up to $5000 worth of power per year. This is why you’re seeing so many solar farms popping up everywhere across the world.
Free Home Power for Renters?
Would you give your renters a promise of unlimited free power if they agreed to your rent price and terms? Would they sign a longer term lease at a premium rent to enjoy the privilege (the cost would cancel out the benefit) of having free electricity?
After they do the math themselves, who knows? But knowing you have free electricity as long they keep renting there sounds like a nice benefit. Power rates likely will rise.
Homeowners: Check out Google’s Project Sunroof for an estimate on solar power savings on your home.
How about these recent news headlines from ABC News:
Calif. Power Rates Go Up 80 Percent
State power regulators decided today how to divvy up the biggest electric rate hike in California history, boosting rates by as much as 80 percent for residential customers who use the most power. More than half of the residential ratepayers served by the state’s two largest utilities will see no increase at all in their rates. But for those who consume the most, the new rates translate into an average increase of $85 per month for electricity.
Residential solar power systems is a fun and interesting topic. Yet it can get very real for households that use the A/C a lot and who have to power up their electric vehicles.
As the public and private California power companies raise prices, at some point, it will become financially sensible to install the solar power systems. Which is why they’re mandating it on new homes right now.
If you’re buying investment properties, the improved attractiveness of these solar powered homes and the cash flow possibilities might look good to future buyers. In 5 years, the situation might look very different.
Beyond Landlord Apps: Simplified Accounting and Tenant/Contractor Portals
If you’re property manager or owner with lots of properties, you have probably been thinking of trying online property management software to ease the workload. If you haven’t found a solution you like, that’s normal.
Try out ManageCasa, an online solution that works with your existing legacy software and gives you the simplified accounting and tenant communications power that landords and property managers must have.
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