PREMIER BUSINESS & FINANCE
REAL ESTATE NEWS
CALIFORNIA’S SOLAR MANDATE AND WHAT IT MEANS FOR LUXURY REAL ESTATE - By: Christina Dube -
The newly passed solar law will mandate the inclusion of solar panel photovoltaic systems on newly constructed residential buildings with three stories or less, effective Jan. 1, 2020.
T
he five-member California Energy Commission, voted unanimously to adopt updates to the state’s building energy efficiency standards. This is the most aggressive move toward curbing green house gas emissions and solidifying California’s position as the national leader in green energy adoption. This sounds like overwhelmingly good news for consumers, conservationists and The Solar Industry. The vote immediately had a positive impact on stock prices for solar companies and ensures an expected 10% increase in demand over the next few years. Speculation is that the increase in demand, combined with ever improving technology, could result in lower solar equipment costs by the time the law takes effect in 2020. Currently, the CEC estimates that the updated Title 24 building codes will increase building costs by $10,000, causing some opponents to argue against the law, citing already sky-high housing prices in California. While $10,000 may be enough to hurt buyers in a lower end, buyers in the $1M plus market will be unaffected. So what effect will this have on the higher end market? Well, first let’s examine exactly what the state is requiring for new buildings. Updates to the Title 24 standards mean that an average home’s energy use can be reduced by up to 53% by including a required solar system of 2-3 kilowatts with the largest projected model at a 7-kilowatt system. So, in terms of your energy bill, what does that get you? Surprisingly little if you own a large, luxury estate. According to Green Tech Media, “the average residential solar system installed by California homeowners in 2017 was 7 kilowatts”. This doesn’t even assume that those systems reach “net metering” or “net zero energy” (producing more energy than used, resulting in energy going back to the grid).
18
We at SAN DIEGO PREMIER know that luxury properties are far from average. The luxury home buyer can expect top properties to include upgrades such as pools and spas, guest houses, electric car-charging stations, air conditioning, outdoor kitchens, temperature-controlled wine storage, or security gates and cameras. These amenities are big energy guzzlers and, of course, the larger the house and the more outbuildings, the higher the energy bill. So, while the state’s new requirement of solar systems will help offset some costs for a large luxury property, it will by no means, enable new luxury estates to reach California’s goal of 53% energy reduction using a maximum 7-kilowatt system. This gap leaves room for some interesting expectations from potential buyers, but also opportunities for luxury real estate developers who will have to compete with existing properties that already offer net zero systems. One of the areas where developers can “sweeten the pot” besides offering larger solar systems, would be to include energy storage systems. These are essentially large batteries that store energy produced during the day, to be used in the evenings when rates are higher. California also offers rebate incentives for these energy storage systems. Real estate agents have long known that home buyers, especially in California, where our energy rates are among the highest in the nation, value solar systems to offset high energy bills. Current and future California homeowners alike need to by savvy about the cost of invested solar systems and the true value based on ever increasing energy rates and consumption models. Overall, this is very good news for homeowners, and our beautiful, sunny state of California.
