Homebuyers in the US are facing a lack of housing supply, a problem that’s been over two decades in the making according to the National Association of Realtors. In 2021, just 15 percent of buyers purchased a newly built home.
But the tide may be turning. The US Department of Housing and Urban Development’s chart tracking new residential construction reveals that the number of granted building permits spiked post-COVID.
This increase was visible in California, where strong demand for single-family home permits persisted throughout much of 2021.
New homes being built in California must be built with solar panels. When this update to the state’s building code went into effect in 2020, it applied to single-family homes and multi-family units up to three stories high.
Interestingly, the California Energy Commission (CEC) is responsible for updating the Energy Code every three years to increase the energy efficiency of buildings and reduce greenhouse gas emissions. For 2023, the CEC is encouraging the use of electric heat pumps and implementing new “electric-ready” standards for homes, on top of the pre-existing solar requirement. The new code also introduces solar and battery storage requirements in more types of buildings, from high-rise apartments to hotels, stores, offices, schools and civic venues.
Let’s break down the effects that these changes will have on new homes and why it could be smart for home builders across the country to implement them as well.
Setting up for energy success
California is known for having ambitious clean energy goals. The CEC notes that homes and businesses use nearly 70 percent of the state’s electricity, highlighting the potential for owners of these structures to make a real difference in the transition from fossil fuels to alternative energy sources. The CEC’s building code updates could reduce emissions over 30 years as much as if nearly 2.2 million cars were taken off the road for a year.
Clean electricity will play a pivotal role in California’s energy mix in the future, so new homes must be built according to forward-looking standards.
Single-family homes in California require electrical circuits for space heating, water heating, ovens and clothes dryers. Service panels must be ready to incorporate battery storage tech (more on that later) and there must be dedicated circuits to simplify a future transition from natural gas to electric.
These measures are worth considering in anticipation of increased energy independence. They will save time and money when incorporated during the building stage; this work is more costly if it is done later as a retrofit.
Californians building new homes must install enough solar capacity to offset their electricity needs. Such a move reduces emissions and pays dividends in the long run. The upfront investment in solar panels is offset by the free energy they provide, which is immune to utility rate hikes and variations in the price of natural gas. When the solar mandate was introduced, it was estimated that new homes would use 53% less energy than those built before the rule was introduced.
Residential solar would add an extra $9,500 to the cost of the build, but would save homeowners $19,000 over the course of a 30-year mortgage. Solar also increases the value of a home, adding a 4.1% premium to the sale price on average.
Ready for battery storage
Solar power is subject to a key constraint: it’s only available during the day, when home energy needs are low. That’s why it makes sense to install a stationary battery that can store unused energy for later, like during peak hours when utility rates tend to increase. In California, new homes will need to integrate the appropriate circuits that allow connection to a battery.
Home backup batteries are also an effective solution for mitigating the effects of power outages, which are on the rise in the US. With solar power and battery storage, homeowners can regain control of their home energy in a self-sustaining way. These devices are also silent and emissions-free, unlike gas-powered generators.
From a state perspective, California’s goal is to harness the power of grid-connected home batteries by coordinating the times at which they send power back to the grid. This decentralized approach to grid balancing has shown potential to reduce the state’s reliance on fuel-powered “peaker” plants that come online when demand is high.
The collective output of these batteries more than doubled over the course of 2021, and they were able to provide almost 1.5 million kilowatts of sustained power by year’s end. This reduced utility rate volatility while creating millions of dollars in value.
Two-way EV charging
As carmakers double down on their shift towards electric vehicles (EVs), homeowners are more likely to purchase an EV one day. When a home is not “electric ready” it can be costly to upgrade electrical wiring and increase the size of the service panel to accommodate at-home charging. In California, 200-amp panels have been mandatory in new homes since 2015 to contribute to solar readiness. Furthermore, the panel should have room for a 40-amp circuit breaker that will come in handy when eventually installing a home EV charger.
With this bolstered electrical capacity, a home is ready for future smart home energy capabilities involving vehicle-to-home power flow (V2H). This allows an EV to act as a stationary battery in the event of a power failure. While typical stationary batteries have around 10 kWh of power storage capacity, EVs contain a lot more. A base-model Nissan Leaf can store 40 kWh, and the upcoming Ford F-150 Lightning’s battery tops out at 131 kWh. Leveraging EVs in this way can keep the lights on for days at a time.
Clean, smart home energy from day one
Building a new home requires so much planning, and oftentimes the energy component is taken for granted. But as the state of California has demonstrated, it’s possible to standardize clean energy requirements in acknowledgment of the several improvements they bring over the traditional centralized grid and natural gas setup.
If you live in another state and are building a home, it would be wise to consider the various ways you can bolster your energy mix. In the face of rising energy costs and an aging grid, leveraging electricity generated by your own solar panels provides an environmentally friendly path to energy security.
Preparing your home’s service panel and wiring for clean power storage integration in the form of stationary batteries and V2H-capable EVs is also a lot easier to do at the blueprint stage, and further reduces the chance that you will ever be affected by a power outage thanks to clean, locally-sourced energy always at your disposal. When these tech components become accessible to you, you’ll be able to plug them into your home energy setup with little hassle.