In 2018, legislation was passed in California that, as of 2020, all newly built single-family homes and multi-family dwellings up to three stories must have solar panels. Additionally, in 2023, all new commercial buildings must have solar panels and battery storage.
The mandate aims to reduce air pollution and lessen the dependence on natural gas. The solar mandate could bring $1.5 billion in customer benefits over the next 30 years, including net metering savings, and decrease 10 million metric tons of greenhouse gasses, equivalent to taking 2.2 million vehicles off the road for an entire year.
“New construction policy and consumer demand are pushing for solar to be integrated into new projects, particularly for all multi-family housing,” says James Rector, Director of Solar Lending at Sunwest Bank. “High energy costs are a key consideration for everyone. People are trying to address inflation-driven high energy costs, and solar offers a solution.”
The California Solar Mandate is having a significant impact on real estate developers and investors today. The mandate will require all new commercial buildings to have solar panels and battery storage by 2023, increasing the construction cost for developers as they must factor in solar equipment and installation costs.
However, developers must also consider the potential long-term savings associated with solar energy, such as net metering savings, to ensure their projects are viable over time. Solar energy can be more cost-effective than traditional energy sources over the long term.
With net metering, solar energy users can receive credits on their electricity bills for any excess energy they generate. With proper planning and installation, solar power can save developers money in the long run.
To comply with the mandate, developers must consider various factors when building a new project. This includes everything from selecting an appropriate site for solar installations to working with local utilities on interconnection agreements. Developers also need to be aware of any available incentives or financing options to help offset some of the additional costs of adding solar panels.
Moreover, investors need to understand how solar energy can increase the value of their investments. By incorporating renewable energy into their projects, they can attract renters or buyers looking for more sustainable living spaces and potentially increase their return on investment over time.
Overall, the California Solar Mandate is driving real estate developers and investors to think creatively about incorporating renewable energy into their projects to remain competitive in a rapidly changing market.