California Solar Mandate: Is Solar Required on New Homes?
- Sarah Lozanova
- Oct 23
- 7 min read
Updated: Nov 22
Table of Contents
The California solar mandate is a critical regulation shaping the future of homebuilding and solar energy in the state. As part of California’s broader clean energy goals, this solar panels California law requires that most new residential construction include a rooftop solar system. For solar installers, this means that solar is no longer a financial upgrade—it’s part of the building code.
Contractors, builders, and solar design partners must now ensure that every solar panel installation in California meets the energy output and system sizing guidelines set by the California Energy Commission (CEC). Understanding these rules is essential not only for compliance, but also for designing cost-effective systems that work well with current interconnection policies and battery storage incentives.
With over 12 years in the solar industry, GreenLancer helps contractors meet California solar mandate requirements with fast, code-compliant plan sets, engineering, and PE stamps for any solar panel installation in California.
What Is The California Solar Mandate?
The California solar mandate is a state law that requires most new residential buildings to include rooftop solar. Adopted by the CEC in 2018, this solar panel California law took effect on January 1, 2020, and applies to all new single-family homes and multi-family dwellings up to three stories. It is part of California’s Building Energy Efficiency Standards (Title 24).
Under these California solar requirements for new homes, builders must install a solar energy system sized to offset the home’s expected annual electricity use. System sizing is based on variables like floor area, orientation, climate zone, and energy efficiency measures included in the building design. The law ensures that most new homes in California come equipped with solar from day one, making solar not just an option, but a requirement.
Does the California Solar Panel Law Require Battery Storage?
No, the California solar mandate does not require battery storage for new homes. However, adding a battery system, such as the Tesla Powerwall or Enphase IQ Battery, can reduce the required size of the solar array by up to 25% under the California Energy Code.
In some cases, combining storage with energy efficiency upgrades or demand response strategies can reduce system size by up to 40%. While batteries aren’t mandated, they offer more design flexibility when meeting the California solar requirements for new homes, and they can help homeowners maximize solar use and backup power reliability.
The Mandate’s Expansion: Commercial and High-Rise Properties
The California solar mandate was expanded in 2023 to include certain commercial buildings and high-rise residential properties. Under the updated California solar panel law, newly constructed commercial properties, such as offices, schools, warehouses, and apartment buildings over three stories, are now required to include solar panel installation in California as part of code compliance.
These expanded requirements are driving increased demand for both rooftop solar and storage systems across the state, creating strong growth opportunities for solar installers who need accurate plans and engineering to handle the complex permits for these larger systems.
Financial Impact of the California Solar Mandate & NEM 3.0
The financial landscape for new solar homes is complex, driven by the mandate, state energy policy, and current utility rate structures.
The Upfront Cost vs. Long-Term Value
The CEC estimated the mandate added roughly $9,500 to the average new home’s construction cost. However, in practice, this cost is absorbed into the home’s overall value, becoming part of the mortgage rather than an optional expense. The CEC projected average savings of $80 monthly, but this estimate was calculated before the dramatic shift in utility policy.
The Critical Shift to NEM 3.0 (Solar Billing Plan)
The rollout of the Solar Billing Plan (commonly called NEM 3.0) by the California Public Utilities Commission (CPUC) fundamentally altered the economics of solar for new construction.
Under the legacy NEM 2.0, excess solar generation exported to the grid was credited at the retail price of electricity. Under NEM 3.0, these credits—called Export Compensation Rates (EPRs)—are tied to the "Avoided Cost Calculator" and are roughly 75% lower than retail rates.
This reduction means that a homeowner whose solar system simply exports power during the day now sees drastically reduced bill savings. This policy shift forces a strategic necessity: Electrochemical Energy Storage (ESS).
The Storage Imperative and Time-of-Use (TOU) Rates
The core challenge under NEM 3.0 is the Time-of-Use (TOU)Â rate structure. Electricity is cheap when the sun is shining (due to high grid supply), but becomes extremely expensive between 4:00 PM and 9:00 PM (peak hours).
Builders and designers must now ensure that the system's power is used rather than exported. This is achieved by:
Self-Consumption:Â Using solar power directly as it's generated.
Storage:Â Charging a battery during the day with cheap solar power and discharging it during the expensive evening TOU hours.
For solar installers, this means every mandated system should be designed as Solar + Storage Ready at a minimum, or ideally, include a battery system to deliver meaningful savings to the homeowner and ensure the mandated PV system remains financially viable.
Strategic Incentives: ITC, Property Tax, and Maximizing Value
Contractors must leverage available financial incentives not only to reduce the final system cost but also to manage the total cost of ownership for the new homeowner.
Federal Investment Tax Credit (ITC)
The most powerful incentive is the Federal Residential Clean Energy Credit (Section 25D). It allows the homeowner to claim 30% of the total installed cost of the solar and battery storage system as a tax credit, if installed before December 31, 2025. This is a dollar-for-dollar reduction in federal taxes owed and is applied to the final system price, regardless of whether the system was paid for up front or financed through the mortgage.
The Critical Property Tax Exclusion
The state of California offers a highly valuable benefit unique to solar: the New Construction Exclusion for Solar Energy Systems. This is specified in section 73 of the state’s Revenue and Taxation Code.
Why it’s Critical: Normally, a permanent improvement that adds significant value to a property (like a new garage or luxury kitchen) would trigger a property tax reassessment, increasing annual tax bills. The exclusion prevents this. It ensures that the increased value of the home due to the mandatory solar system—which can be substantial—does not result in higher property taxes.
The current property tax exclusion is scheduled to sunset on January 1, 2027. Any system installed and operational before that date locks in this tax protection for the entire life of the system. This creates an urgency for builders to finalize projects and a powerful long-term selling point for new home buyers.
State-Specific Storage Incentives (SGIP)
While the CEC mandate drives solar, California also runs the Self-Generation Incentive Program (SGIP). Though often complex and allocated regionally by utility providers, SGIP offers substantial rebates specifically for battery storage installations.
This program is critical for contractors who want to include ESS as part of the mandated package, as it can significantly offset the cost of the battery, making the Solar + Storage solution financially attractive despite the challenges posed by NEM 3.0.
California Solar Mandate for Commercial Buildings and High-Rise Projects
California regulators have updated the Build Energy Efficiency Standard, which impacts commercial properties. Under the California Solar Mandate, numerous new commercial projects, including retailers, offices, schools, apartment complexes, and medical facilities, are required to install solar systems with battery storage.
The CEC estimates this will add 280 MW of solar energy capacity annually, which creates a lot of work for solar contractors. In addition, the mandate will also add an estimated 480 MWh of battery capacity to commercial properties.
California is promoting the installation of storage batteries partly to reduce the impacts of public safety power shutoffs where utility companies shut off the electricity to help prevent wildfires.
Streamlining Compliance: Exemptions and Permitting
Ensuring compliance with California solar requirements for new homes involves navigating sizing rules, site feasibility, and permitting processes.
Available Exemptions
While the core rule is: are solar panels required on new construction in California?—Yes, there are a few exemptions:
Homes with small roofs or excessive shading may be exempt from installing a rooftop array.
Seasonal properties lacking one basic utility or amenity for year-long occupancy.
Multi-unit buildings in areas without virtual net energy metering.
New homes can satisfy the mandate requirements by subscribing to a community solar farm instead of installing rooftop solar systems.
Tools for Compliance
The California Energy Commission has approved using the Solar Assessment Tools to comply with the California Solar Mandate. These tools include:
The Solar Photovoltaic (PV) Calculator assesses a building's energy characteristics and estimates the number of photovoltaic modules needed.
The California Solar Shade Analysis evaluates available solar access to a development site and estimates energy savings from incorporating shading structures or vegetation.
The California Utility Allowance Calculator (CUAC) calculates utility allowances for low-income housing projects based on the design of the photovoltaic system, the proposed building's energy features, and any relevant utility rates or tariffs.
GreenLancer’s design and engineering portal: A fast way to get permit-ready plan sets and PE stamps tailored to Title 24 requirements
Solar Permitting in California
California leads the nation in streamlined solar panel permitting efforts, revolutionizing the approval process for PV projects. Through initiatives like the Solar Permitting Efficiency Act (AB 2188), California has standardized procedures, reduced administrative hurdles, and expedited reviews. These efforts promote the widespread adoption of solar energy and serve as a model for other states striving to accelerate renewable energy deployment.Â
Despite the California Solar Mandate, permitting solar projects can be challenging in California and beyond due to building and electrical code requirements. Unfortunately, many solar contractors encounter red tape when obtaining solar permits. GreenLancer was founded to accelerate the adoption of solar energy by offering solar permit services, such as PV plan sets, solar engineering stamps, and interconnection applications.
SolarAPP+
California is working to streamline the solar permitting process with Solar Automated Permit Processing or SolarAPP+. This new web-based solar permitting platform was created to streamline and automate the solar plan review and PV permitting process. It is currently up and running for single-family rooftop solar systems on existing homes in certain jurisdictions, which can help implement the California Solar Mandate.
Authorities Having Jurisdiction (AHJs) in California that have fully adopted SolarAPP+ for PV permitting include Benecia, Dublin, Menifee, Modesto, Pleasant Hill, San Luis Obispo, Sacramento County, San Marcos, San Ramon, Simi Valley, Sonoma County, and Stockton. In addition, some AHJs are piloting the use of SolarAPP+, including Alameda, El Cajon, Kern County, and Palo Alto.
California Solar Mandate is Fueling Demand
With rooftop solar now required on most new residential and commercial buildings across California, there is growing demand for experienced solar professionals. For contractors, this creates a steady pipeline of projects, but not every installer has the time or team to chase down leads.
Whether you're a solar contractor looking for fast, code-compliant permit plan sets or a homeowner in need of expert solar repairs or upgrades, GreenLancer has you covered. Our U.S.-based team and nationwide network of licensed professionals deliver reliable support for every stage of your solar projects. Complete the form below to get started.