How Does the California Solar Mandate Impact Homeowners and Businesses?

California is a leader in solar energy production in the United States. The state has taken big steps to use more renewable energy sources through the California Solar Mandate, an initiative for home and business owners who want to enjoy the benefits of solar power. This is timely as the state moves away from fossil fuels, like natural gas, and promotes more energy efficiency in buildings.

With 41 megawatts (MW) of installed capacity thanks to the California Solar Mandate, California powers 11.5 million homes with clean solar energy. If you’re thinking about installing panels on your home or business, let’s discuss how the California Solar Mandate impacts you.

What is the California Solar Mandate?

The California Solar Mandate is an environmental initiative that went into effect on January 1, 2020. It requires that all new single-family and multi-family homes (up to three stories) include a solar panel system. This groundbreaking law is part of California’s bigger efforts to fight climate change and utilize more clean energy. It also aligns with the state’s ambitious goal to have 50% of its electricity generated from renewable sources by 2030. 

Under this mandate, every new home built in California must have a solar system that generates electricity to meet the home’s annual energy needs. Builders determine the size of the systems based on the size of the property and the local climate zone. This ensures that each new building contributes to the state’s renewable energy goals.

The mandate also offers some flexibility to home builders, allowing them to tailor solar solutions to their specific projects. For example, by adding battery storage systems, like a Tesla Powerwall or an Enphase IQ Battery 5P, builders can reduce the required size of the solar installations by up to 25%. This flexibility helps manage costs while still meeting the mandate’s requirements.

Does the California Solar Mandate Require Batteries?

Under the mandate, installing solar batteries is optional, not a requirement. This means that while every new single-family and multi-family home must have a solar system, they don’t have to install a battery storage system. However, adding a solar battery comes with significant benefits.

When you pair a battery storage system with your solar panels, it enhances the functionality of your solar power system. One key benefit is the ability to reduce the required capacity of your solar system by up to 25%. This reduction is possible because the stored energy can be used when solar production is low, like at night or on cloudy days. This effectively reduces the amount of solar needed to meet your home’s energy demands throughout the year.

Plus, adding other energy-efficiency systems can decrease the size of the solar power system needed by an additional 40% or more. These measures might include energy-efficient appliances, smart home systems, and responsive energy management systems that adjust energy usage based on real-time data.

By reducing the overall size of the solar system needed, homeowners can lower the upfront cost of installing solar panels. This is because smaller systems require fewer panels and potentially less labor to install. Plus, the energy stored in batteries provides a reliable power supply during power outages or periods of lower solar production.

How Does the California Solar Mandate Affect Commercial Properties?

Starting in 2023, the California Energy Commission (CEC) made big changes to the California Energy Code, especially for new commercial buildings. These changes impact new commercial properties, like high-rise residential projects, hotels, offices, medical offices, health clinics, grocery stores, restaurants, schools, and civic spaces. All of these commercial projects must have both solar panels and a battery storage system installed.

Commercial properties were included to increase the use of renewable energy sources to power a wide range of buildings. By requiring solar and battery storage, California is taking a stronger approach to ensure homes and commercial spaces contribute to the state’s green energy targets.

What is the Impact of the California Solar Mandate?

The California Solar Mandate has changed the residential solar and commercial property landscape in California. Whether you’re a homeowner or business owner, here’s how the mandate impacts you:

Impact on California Homeowners

The mandate requires all new single-family homes and multi-family homes (up to three stories) to include solar photovoltaic (PV) systems. This applies to new construction only; existing homes are exempt unless they undergo significant renovations. These new homes must also have wiring that supports a transition from gas-powered appliances to all-electric systems so they’re “solar-ready.”

Starting in 2023, the mandate included high-rise residential projects, expanding its scope even more. Homeowners who install additional solar energy storage or energy-efficient upgrades can reduce the overall capacity required for their solar panel systems. Moreover, adding solar storage makes homeowners eligible for financial incentives through programs like the Self-Generation Incentive Program (SGIP), which has more than $1 billion in funding available through 2024.

Disadvantages for New Homeowners

The mandate has faced criticism for potentially raising the cost of new homes due to the initial solar installation expenses. Critics argue this could make homeownership less affordable for some Californians.

However, the California Energy Commission (CEC) says the increase in home prices—estimated at $8,400, or about $40 more per month on a mortgage—is offset by savings on your energy bill, which could be around $80 a month. However, recent changes to net energy metering policies (NEM 3.0) might reduce these savings for homeowners.

Impact on California Businesses

The mandate extends to commercial properties as well, with new requirements that took effect in 2023. A wide range of commercial buildings, such as offices, schools, apartment complexes, and medical facilities, are now required to install solar systems with battery storage.

This initiative is expected to add about 280 MW of solar energy capacity and 480 MWh of battery capacity each year to California’s energy grid. Plus, these changes help support California’s bigger goals, like reducing the effects of public safety power shutoffs.


The California Solar Mandate impacts how new homes and businesses approach energy use. By requiring solar installations on new homes, California is setting a standard that could shape future energy policies across the country. For homeowners and businesses in California, the mandate represents an opportunity to move towards a more sustainable future. 

If you’re ready to change the way you power your home and start saving more with solar and battery backup, contact us today for a free customized quote.


Frequently Asked Questions About the California Solar Mandate

Are There Exceptions to the California Solar Mandate?

Yes, there are some exceptions to the California Solar Mandate. Homes with small roofs or too much shading make a solar panel installation impractical and may be exempt from the mandate. Additionally, seasonal properties that aren’t used year-round and multi-unit buildings in areas without virtual net energy metering also qualify for exemptions. These exemptions ensure the mandate applies only where it’s feasible and effective.

Are Solar Panels Required on All New Homes in California?

Since 2020, the California Energy Code requires that most new residential buildings, including single-family homes and multi-family structures up to three stories, be equipped with solar panel systems. However, there are exceptions for certain property types, including vacation homes, homes with limited roof space or homes with too much shade.

Are There Tax Benefits to the California Solar Mandate?

Yes, homeowners and businesses can benefit from various tax incentives. These include federal tax credits for both residential and commercial solar projects, which can significantly reduce the upfront cost of installing solar panels. Additionally, under Section 73 of California’s Revenue and Taxation Code, solar installations don’t increase property taxes. This is because the added value from your solar panel system is excluded from property tax assessments.

Do Other States Have Similar Solar Panel Mandates?

Currently, California is the only state with such a mandate for new construction projects. However, the success of California’s policy may inspire other states to adopt similar measures. States where the housing market is booming are being encouraged to consider similar mandates to promote more renewable energy use.

Do Solar Panels Increase Property Taxes in California?

No, installing solar panels doesn’t increase property taxes in California. Thanks to the property tax exclusion stated in Section 73 of the California Revenue and Taxation Code, the value added by solar systems doesn’t affect property tax calculations. This provision applies to residential, commercial, and industrial properties with solar installations from January 1, 1999, to December 31, 2024.


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