Will Solar be Mandated for CRE, Too?

California is now requiring new homes to have solar panels installed on all newly built homes and low-rise multifamily buildings. Will this come to commercial real estate everywhere and in all states? As the first of its kind in the U.S., California will be the test case and will likely determine the answer to that question.  

The Sustainability/Green Trend Benefits to Commercial Real Estate

The mandate goes into effect in two years and should be fully implemented in California by 2020. This is a continuation of the green movement that’s been built over decades in California and has since spread across the country. New solar technology and advanced green innovations are actually saving money now instead of costing too much to be feasible for most.

Backers of the new mandate believe that implementing a law like this will help grow the solar market and thus, drive down costs of solar installations. Still, despite the costs for installing solar panels on rooftops dropping precipitously over the last several years, it is still more expensive upfront than traditional electric power or power generated from a solar farm.

Could the CA Mandate Be Replicated Nationwide?

Naturally, following a mandate that will affect so much in commercial real estate in one of the most populous states in the country, many are wondering will other states follow California’s lead and implement their own solar mandates. While there are many benefits to implementing policies like this, there are some cautions to consider.

For one, not every state – in fact very few states – get as much sunshine year round as California does. The amount of solar power generated in New England over the winter will be far less than in California. What will that do to solar prices and energy costs in the northeast?

On the other hand, a simple tax similar to the gas tax or a carbon tax could subsidized the difference in order to stabilize pricing while innovators find ways to share solar energy between states in a new type of energy grid. That would mean years before most states could even overcome the debates and to pass the legislation required to make this a national policy.

Could Obstacles to a Nationwide Solar Mandate be Overcome?

Many politicians don’t even acknowledge the existence of climate change and are in political opposition to mandates instituting green policy. For decades the idea of a carbon tax has been politicized to the point of paralysis and the idea of completely rethinking the energy grid are all obstacles that will perhaps be the hardest to overcome in order for a nationwide solar mandate to be legislated.

Nonetheless, if California’s experiment proves to be successful at expanding green innovations that result in real savings, many states, especially those in the southwest where sunshine is abundant year round, may consider instituting such mandates.

One of the biggest knocks against the mandate issued earlier last month by the California Energy Commission is that it is not flexible enough to take into account factors like location. There are few exceptions, reasonably so in order for the mandate to be implemented, but also at the expense of some who will take exception to such a mandate.

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