California Embraces Solar Power As An Alternative Source Of Energy

California Embraces Solar Power As An Alternative Source Of Energy

California recently made it clear to the whole world that in future people would have t o use the solar power as an alternative source of energy Wednesday,The State emerged as the first state in the U.S. to require solar panels on almost all new homes. Majority of the built apartments those will be built after Jan. 1, 2020, will have to include solar systems and they will abide by the standards.of the California Energy Commission fo The solar industry will definitely get a boost up due to this but the critics cautioned that it will also increase the cost of buying a house by almost $10,000. Homebuilders fell that is the primary cause of a decline in solar shares The move cleated the ambiguity among people regarding rooftop solar panels that was initially considered as a luxury meant only for the affluent people. The solar energy became a source of mainstream energy source for California. — the nation’s largeslar market The state has long been hitting the headlines of the newspapers for its progressive energy policies, from setting energy-efficiency standards for appliances to conduct an economy-wide program to curb greenhouse gases. The Governor Jerry Brown recently decided to reduce carbon emissions by 40 percent by 2030, and set up an example for other states to follow San Francisco-basedSunrun Inc. has become the largest U.S. residential-solar installer. Oppenheimer & Co. has raised its price target Thursday for the company to $12, from – 0biggest beneficiary The shares of Sunrun rose as much as 15 percent to $11.34 Thursday, the most intraday since November 2016.First Solar Inc., a U.S. panel manufacturer, gained as much as 6.3 percent.KB Home, which has significant exposure to the California market, fell as much as 1.7 percent.

The U.S. had 10.4 gigawatts of residential solar power at the end of last year, up more than sixfold from five years earlier. The industry started slowing in 2017 amid policy changes and efforts by some companies to shift their strategies.

“Adoption of these standards represents a quantum leap in statewide building standards,” Bob Raymer, senior engineer of the California Building Industry Association, said during the meeting before the vote. “You can bet
the other 49 states will be watching closely what happens.”

Tesla Inc.’s Francesca Wahl, senior associate of business development and policy, was among the company representatives to back the mandate at the meeting Wednesday, and expressed support for provisions that will
also promote wider use of energy storage systems.

California’s solar policy will exacerbate another critical issue in the most populous state, where high housing costs are seen as a drag on the economy that also contributes to rising social tensions.

“With home prices having risen as much as they have, I think home buyers would find it a little distasteful to be forced to pay more for solar systems that they may not want or feel like they can’t afford,” said Brent Anderson, a
spokesman for homebuilder Meritage Homes Corp. “Even though, in the long term, it’s the right answer.”

California’s economy added 2.3 million jobs over the past five years. Over the same period, the state issued permits for fewer than 480,000 new residential units, or about one home for every five additional workers.

The new policy applies to single-family houses and multifamily units that are three stories or less, and there are some exceptions for homes that are too shady. Homebuilders will probably try to pass on the costs to customers, Carl Reichardt, a San Francisco-based analyst for BTIG LLC, said in a phone interview before the vote.

Big homebuilders like KB Home and Meritage have an advantage because they’ve been offering solar homes for years. Smaller builders will have a harder time managing the new requirements, he said.

Installing a solar system and complying with other energy-efficiency measures required will add about $9,500 to the cost of a new home, according the the California Energy Commission. That would be offset by about $19,000 in expected energy and maintenance savings over 30 years, the commission estimates.

‘Admirable But Misguided’

Bloomberg New Energy Finance analyst Colleen Regan described California’s decision as “admirable but misguided.” The standard isn’t the best way to curb the state’s greenhouse-gas emissions and could exacerbate the steep ramp-up in solar power production that California’s grid operator is already grappling with at midday.

“It’s also a policy that very clearly is picking winners, and California would be better off focusing its efforts on the real source of the problem — greenhouse gases — rather than favoring one zero-emissions technology over others,” Regan said.

The energy commission meanwhile said the standards would cut greenhouse-gas emissions tied to home energy use while saving residents money over time. The California Building Standards Commission will need to adopt the rules as a formality.

Lynn Jurich, Sunrun’s chief executive officer, praised the decision, describing it as “a vote of confidence that these assets create value for the whole energy system.”

Jurich said in an interview that the standard is an opportunity for Sunrun, which offers solar leasing. With no-money-down solar service agreements, there aren’t additional costs to a builder, she said. “We are well-positioned
to serve that market.”

Solar Demand

The state adds about80,000 new homes a year, and the California Solar & Storage Association estimates that about 15,000 include solar power. The Energy Commission says that the average home system uses 2.5 kilowatts to 4 kilowatts of panels, so the additional 65,000 new systems would add as much as 260 megawatts of annual demand in the state — about the size of one large solar farm.
SunPower Corp. expects the rule willincreasedemand for residential solar in the state by about 50 percent. The San Jose, California-based company makes panels and develops solar systems ranging from rooftops to large,
utility-scale power plants.
It’s unclear how much major solar installers like Sunrun and Vivint Solar Inc. will benefit, said Joe Osha, a San Francisco-based analyst at JMP Securities. They typically target existing homeowners rather than companies building new homes.

“Your initial reaction is: ‘Oh, that’s great for the solar company,’” he said. “But their business is about acquiring individual customers. If you’re working with homebuilders, it’s a completely different thing.”

Some of the world’s largest solar-equipment manufacturers in Asia stand to gain in the long-run. president Donald Trump slapped tariffs on solar equipment imported into the U.S. in January, and that could mute some short-term gains.

But those tariffs phase out after four years, and “if you’re being forced to install something that you may not want, you’re going to go the cheapest route,” said Hugh Bromley, a Bloomberg New Energy Finance analyst. “And that’s likely to be equipment imported from Asia.”

by TNBC Staff Reporter on May 22, 2018

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