California regulators, eyeing rising home prices, eased off on the state’s pioneering requirement for new homes to have expensive solar panels, a move that environmentalists say will hurt the state’s chances of meeting its goal for 100% renewable energy

California Energy Commission officials voted to allow developers in the Sacramento area to build homes without rooftop solar panels. The vote permits Sacramento Municipal Utility District to generate solar at places other than residences. The utility plans to provide enough new solar capacity to meet demand from new residential buildings through community solar farms.

The solar mandate, which took effect on Jan. 1, was seen as a model for the rest of the world when the commission approved it in 2018. It included a little-noticed provision allowing for utilities and organizations to apply to build “shared solar” offsite for homes and apartments to draw from. Supporters of offsite solar say that it cuts carbon emissions without pushing up home prices in a state facing rising homelessness and a shortage of affordable housing.

Removing the mandate in Sacramento won’t cut the amount of solar generated, and may have other benefits, Peter Miller, the Natural Resources Defense Council’s western energy project director, told Karma.

“Panels in a community solar project are more likely to be well-maintained and less likely to be shaded over time, resulting in somewhat higher output,” Miller said. “On the other hand, rooftop panels provide higher economic returns to the homeowner because of the ratemaking treatment.”

The debate over the mandate set utilities, homebuilders and labor unions against the solar industry and environmentalists.


“The state of California and the Sacramento region are facing an affordable housing crisis and our low-cost solar option provides a valuable tool to lower the construction costs of new homes while supporting carbon reduction goals,” Arlen Orchard, CEO of the Sacramento utility district, said in a statement. 

Environmentalists say the move defeats the spirit of the law. They argue that more rooftop panels would put California on firmer footing to meet its goal of 100% renewable electricity in 2040. Rooftop panels would also enable a home to power itself with the help of batteries during an electrical shutoff in a state that regularly has them to avoid wildfires.

Governor Gavin Newsom made California’s homeless crisis the focus of his State of the State address on Wednesday. He pledged to make more land available, urged the legislature to allow higher density development at transit hubs and said he would look for ways to cut housing costs. San Francisco has the highest building costs in the world, Turner & Townsend said in a 2019 report.

The Energy Commission estimated at the time of the mandate’s passage that installing solar panels would boost construction costs by $9,500 for a single-family home but said owners would save about $19,000 over 30 years. Based on a 30-year mortgage, the standards are projected to add about $40 per month in additional costs for the average home, while saving consumers $80 per month on energy costs.

Solar industry trade groups criticized the ruling.

“Solar energy saves consumers money starting on day one,” Bernadette Del Chiaro said. “Affordability of living in California includes relief from ever rising energy bills. There are financing options that allow for no additional cost to the homeowner.”