California’s rooftop solar rule is a pricey path to emissions reductions

California will now require solar panels on most new homes, extending the state’s role in pushing some of the strictest environmental regulations in the United States.

But this feel-good change to the building code is a questionable public policy for cutting greenhouse-gas emissions.

The big problem with the California Energy Commission’s new mandate—which passed on May 9 and goes into effect in 2020—is cost.

Compared with solar power plants, rooftop solar is “a much more expensive way of increasing renewables on the grid,” says Severin Borenstein, an economics professor at the University of California, Berkeley, who shared his concerns in a letter to one commissioner.

In fact, residential solar systems cost between 12.9 and 16.7 cents per kilowatt-hour averaged over their lifetime, according to a National Renewable Energy Laboratory report last year. That’s more than double the cost of utility-scale solar systems, which range from 4.4 to 6.6 cents.

As it is, it’s going to be incredibly expensive and difficult to overhaul the energy system, so researchers stress that it’s crucial to follow the most cost-effective paths possible (see: “At this rate, it’s going to take nearly 400 years to transform the energy system”). 

“I think there are indeed limited political resources that can be mustered against climate change,” Borenstein said in a follow-up e-mail. “By demonstrating a very expensive way to reduce greenhouse gases, I think this could very likely be used in other states and countries as an argument against moving toward renewable energy.”

The new rule could add more than $10,000 to the costs of building a home, raising the price tag in what’s already one of the most expensive states to purchase housing. But buyers are expected to pay lower monthly energy bills as a result of this change and eventually save money over time.

Borenstein notes that these savings are effectively subsidized by other ratepayers without solar panels, net metering, and solar tax credits.

California has already made giant strides in adding renewable-energy generation, which has started to create its own set of problems. On very sunny days, the state’s solar plants can generate more energy than the system is able to use, pushing prices into negative territory (see “Texas and California have too much renewable energy”).

Effectively integrating a growing supply of intermittent solar and wind energy will require adding far more storage, transmission, and smart grid systems. As it stands, the state’s grid operator lacks basic tools for monitoring, communicating, and reacting to a continually shifting supply of rooftop solar.

California estimates that the new rule will cut emissions by 1.4 million metric tons over three years, which is a small fraction of the 440 million tons the state generated in 2015. As others have pointed out, policies requiring higher residential density would do far more to cut emissions, largely by discouraging people from driving cars.

But such proposals are far more controversial than solar panels. Last month, California legislators killed a bill that would have overridden local rules to allow five-story housing development along transit centers.

“While additional distributed renewable electricity will be helpful, California’s climate elephant in the room remains the greenhouse gases from people driving cars,” said Costa Samaras, an assistant professor of environmental engineering at Carnegie Mellon University, in an e-mail. “Increasing the density of housing near employment centers and encouraging housing near transit, as well as the continued electrification of transportation, are essential to deep decarbonization in California.”