By Krisztina Pusok and Ana Diaz, American Consumer Institute
California’s solar energy mandate was officially implemented at the beginning of this year, making the Golden state the first in the nation to implement a law that obligates all newly constructed houses to have solar panels. Hawaii, Arizona, Maryland, and other states have announced they will follow suit. While the mandate is an attempt to reduce greenhouse gas emissions, mandated solar panels will negatively impact homeowners by adding thousands of dollars to the cost of housing.
Back when California first announced the implementation of the mandate in 2018, it did not take into consideration the unseen costs that would follow. According to the Harvard Joint Center for Housing Studies, cost-burden in California was already around 42 percent in 2016.
A recent study that we conducted in-house at the American Consumer Institute (ACI) finds that net metering laws mostly help high-income consumers at the expense of low-income consumers. As such, there would be no benefits provided for low-income and minority households.
Instead of increasing the burden on the financially marginalized population, states should be working on providing American consumers with affordable energy options that seek to reduce carbon emissions, but not at the cost of an already increasing housing crisis.
The U.S Department of Housing and Urban Development recognizes that a family’s cost-burdened becomes problematic when they spent more than 30 percent of their income on housing and find themselves with difficulties affording rent and other basic goods. Housing cost burden becomes severe when residents spend more than 50 percent of their income on rent. Currently, California is dealing with a severe case of housing crisis according to the Harvard Joint Center for Housing Studies.
Implementing a law that obligates all newly constructed houses to have solar panels will only negatively affect California’s residents, and worsen the affordable housing crisis that they are already facing. Other states that also top the housing crisis include New York, New Jersey, and metro areas in most states. Currently, there are 20 metro areas nationwide where consumers spend more than 30 percent of their income on housing.
Take the case of Maryland, a state that is already in talks about implementing a similar law in at least one of its counties. According to the Washington Post, Montgomery County lawmakers now want to implement a law that will require all new single-family houses, apartments, and possibly commercial buildings to have solar power. And similar to California, nearly 50 percent of all renter households in Montgomery County are already cost-burdened, which means consumers will be paying an even more hefty price to put a roof over their heads.
Such laws threaten to increase construction costs while providing residents with no savings on their utility bills. This is not a solution to the affordable housing crisis. And mostly, addressing the housing crisis should not come at the cost of the environment, and vice versa.
California approved the solar panel mandate on the motivation that consumers would save more money if they own a solar panel at their house. Yet, the option of owning a solar panel in their house should be that, an option. For renewable energy systems to makes sense, they should consider a series of different factors.
More specifically, a study conducted by Baker Shepherd Gillespie LLP (BSG) Ecology about the “potential ecological impacts of ground-mounted photovoltaic solar panels in the UK” suggests that adverse environmental effects are relatively limited and location-specific. The government should seek ways to incorporate other affordable environmentally friendly energy options that do not burden consumers. The ACI study suggests that if policymakers seek ways to reduce CO2 emissions, they should recognize individual rooftop solar panels are an inefficient strategy. The best alternative will be to implement utility-based systems as they lead to lower solar costs and avoid about half of the carbon emissions compared to residential rooftop panels.
While California is now re-evaluating its seven-week-old law, consumers are already starting to feel the disastrous consequences.
Before other states obligate every homeowner, regardless of their income, to put a solar panel on their roof, policymakers need to first consider how affordable housing, system costs, and location factors into their proposed solution.
Krisztina Pusok is the Director of Policy and Research and Ana Diaz is a Policy Intern at the American Consumer Institute.