Solar Panels on all new home starting in 2020

Last week, when the California Energy Commission voted to include solar on all new residential construction on buildings under three stories, starting in 2020.

The solar industry took notice, and so did the media. There were also articles saying that solar panels would increase the cost of those new homes, and still other articles that said the cost of installing solar would drop dramatically.

Maybe both can be true, but for most people who want solar, the prices will not drop as much or as fast as one would think. One thing for sure, this is a tremendous shot in the arm for solar in general, and if it is popular in California, the rest of the country usually starts to follow eventually. 

Swanson’s Law explains the price of solar panels

The cost of materials will continue to fall, but in most installations, the major costs are in the permitting process, and the installation itself.

To explain the falling costs of the materials, there is a law called Swanson’s Law that states that the price of solar panels drop 20 percent every time that the industry doubles its output. In other words, every time twice as many people install solar, those panels get 20 percent less expensive.

This law was created by Richard Swanson, who founded SunPower Corporation. 

Basically, it explains why solar panels are at least three times cheaper than they were just a decade ago. While remarkable, and with every indication that this astounding trend will continue (some data shows the decline speeding up), that’s still just the panels.
 

Soft costs make up most of the price of solar installations

Everything else when it comes to the cost of installing solar panels can be summed up the term soft costs. For rooftop solar, some of these soft costs include permitting, financing, installation labor, and paying suppliers to name a few. With existing homes, those costs are higher, and there is more labor involved, and with new homes, some of those costs are combined with other costs to make them all smaller costs. HahaSmart, in fact, achieves the lowest solar quotes in the U.S. by optimizing the solar process and getting rid of unnecessary soft costs. 
 

Permitting and inspection costs for solar

For example, if a builder needs a series of homes inspected anyway, it won't cost much more to add the solar inspection to those homes. Whereas with an existing home, the homeowner or installer has to fill out the permit for the solar power, and then the work has to pass inspection. Those costs are a higher percentage of the whole project than if they were just a line item on a whole house construction.

Also, installation is easier and less expensive when it is combined with a new home. If you are adding a roof while installing solar, it is easier and cheaper than if an installer has to crawl around the attic to secure the racking. Adding solar to existing homes is just more labor intensive, and has more permits involved. Even the U.S. Department of Energy (DOE) estimates soft costs can be almost two-thirds of solar panel total costs.
Those soft costs aren’t decreasing as fast as hardware costs. However, this move by California is likely to bring down soft costs more than before, as it is expected to put downward pressure on nearly every one of these soft cost categories. For newly built homes, in many cases, it eliminates them altogether. 

There is some talk of solar power installations costing as little as $1 a watt, and that will probably be achieved in new construction, but existing homes will still see dramatic drops in soft costs. As there are more installations out there, and as the industry advances, those costs will start to fall in line.
 

Solar panel efficiency will continue to increase

Panels will continue to get more efficient and less expensive to manufacture.

New homes, as well as existing homes, will continue to get more energy efficient. Homes will require less power, which will require less solar panels. According to the law of supply and demand, these series of fortune events will lead to cheaper solar panels for everyone. 

The whole mandate is a giant circle that will keep improving the cost as we go around and around.  

This monumental move by California shifts the playing field in unprecedented ways. Now residential solar will be much better able to leverage economies of scale across a wide variety of soft costs in ways that just weren’t possible before.

Don’t wait until 2020 or after to start your solar revolution. Visit HahaSmart and try out our Price Checker Tool yourself. You can not only see how much a solar panel system would cost in your area. Enter the information and see how much you can save in the next 20 years.

For information relating to going solar don’t forget to visit our solar blog section for more handy guides and articles.