Reactions split over California solar panel mandate

Key Points
  • California regulators approved a plan to mandate solar panels on all new residential buildings in the state, starting in 2020.
  • Some critics say this will disproportionately hurt low-income homeowners or would-be homeowners.
  • Others say the return on energy savings is worth the investment.
Experts debate California's new solar panel mandate

Reactions are split on California's decision to mandate solar panels on new homes in the state.

The measure, approved by California regulators in a unanimous decision on Wednesday, will require all new residential buildings, including apartments and condos that are three stories or fewer, to have rooftop solar panels starting in 2020.

The California Energy Commission, the body responsible for approving the decision, estimated the panels will tack on approximately $9,500 in additional construction fees but save homeowners $19,000 in energy bills over the course of 30 years.

But Jimmy Pethokoukis, economic policy analyst at the American Enterprise Institute, said the mandate will only hurt California homeowners who can't afford the upgrade in an already saturated housing market.

"This is great for wealthier homeowners, but for everybody else it's one more reason to not go to California or to leave ASAP," said Pethokoukis, who called himself "an escapee of Los Angeles and California."

"After 30 years you might make your money back," Pethokoukis told CNBC on "Closing Bell" Wednesday.

California governments "really don't care about the cost of living," he said. "What they should focus on is affordability and lowering the cost of living for Californians in a key state where we have these high-productivity cities. We should want more people to move to California," Pethokoukis said of the state that is now the world's fifth-largest economy.

Kelly Knutsen, director of technology advancement at the California Solar & Storage Association, said the move is a "win-win" for consumers of all income levels and the environment.

"Low-income families spend proportionally more on their energy bills than anybody else," he said on "Closing Bell" Wednesday, calling the panels a "great investment for Californians."

"The energy savings that they're going to get on a monthly basis is going to be twice as much as what the increase in the mortgage would be," Knutsen said. "That's a 200 percent rate of return."

California is the first state to mandate solar panels in homes. Shares of the Guggenheim Solar ETF were up more than 1 percent on Wednesday. But housing stocks, including PulteGroup, LGI Homes, Hovnanian Enterprises and Beazer Home USA, all closed lower.

The commission estimates that the panels will cost residential homeowners about $40 a month, but save them about $80 a month on things like heat, air conditioning and lighting bills.

But Pethokoukis pointed out that homeowners will still "have to come up with the money to buy that house up front," and California homes aren't cheap.

"The cost of solar is dropping," he said. "Why do this now?"