California regulators relied on precarious assumptions and incomplete data to rationalize their decision to require every home in the state be fitted with solar panels.
The California Energy Commission made history when it voted in May to mandate every home carry solar panel installations. The rule — the first of its kind in the country — will apply to all newly built homes and low-rise apartment buildings beginning in January 2020, with some exceptions for shaded houses and people already involved in other renewable energy programs. (RELATED: California Will Force EVERY New Home Owner To Install Solar Panels)
The new mandate was the latest in California’s bid to be a leader in renewable energy development. Democratic Gov. Jerry Brown, a major proponent of climate change legislation, has continually pushed for a higher renewable energy mix in the state while attempting to phase out coal generation.
Besides touting the environmental benefits that would come with such a mandate, the California Energy Commission argued that it would ultimately save residents money. However, one policy expert has dumped cold water on those claims.
Steven Sexton, an assistant professor of public policy and economics at Duke University, outlined where the Commission relied on biased analysis and made flimsy assumptions on what the future costs of solar technology would be — mistakes that don’t reveal the true costs of owning solar panel, according to him.
“Though the solar mandate is unlikely to deliver huge savings to consumers, it certainly will raise the price of new and old homes,” Sexton wrote in an op-ed for The Wall Street Journal.
The Commission argued that homeowners would save money with solar panels. Instead of using an independent investigation, however, they relied on economic analysis from Energy and Environmental Economics Inc., a consultancy group that proposed the very mandate they were studying. Energy and Environmental Economics concluded that homeowners would pay $40 more in monthly mortgage costs but save $80 a month on electricity — a supposed 100 percent return on investment.
Adding further scrutiny to their energy savings estimations, regulators conducted the study with the assumption that that California’s net metering policy would remain the same. Net metering — a solar subsidy program that ultimately passes costs from panel owners to non-panel ratepayers — has been second guessed and reformed across the country. The California Public Utilities Commission is set to reconsider their net metering program in 2019, one year before the mandate is to go into effect. If regulators choose to scale back these subsidies, solar panel owners would likely lose money on such an investment.
Additionally, Sexton argued that the Commission was overly optimistic on the price of solar panel installation. They concluded that the cost was $2.93 a watt in 2016 and would drop 17 percent by 2020, but a study by the Lawrence Berkeley National Laboratory found that the average cost of panels to be $4.50 a watt for the 2- to 4-kilowatt systems the new policy requires.
Sexton argued that if California regulators were truly interested in the development of solar-generated electricity, they would look toward the economies of scale that is found in large solar farms — projects which produce twice as much electricity as the new mandate placed on small residential homes, but at the same exact cost.
“Sacramento politicians accuse the Trump administration of ignoring science and forgoing expert, independent review in pursuing its environmental and energy agenda,” he wrote. “They should look in the mirror.”
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