California Prioritizes Bailing Out Elon Musk Over Building Affordable Housing

Michael Bastasch | Energy Editor

California has a housing crisis, so state energy regulators voted to make most new homes up to $12,000 more expensive by mandating they have solar panels. Wait, what?

That’s right. The California Energy Commission voted unanimously on Wednesday to mandate solar panels be on the roofs of virtually all new homes built in 2020 and beyond.

It’s bad news for Californians looking for affordable homes — and anyone who pays for electricity — but it’s great news for Tesla CEO Elon Musk and other solar industry executives. Representatives from both Tesla and Sunrun spoke in support of the rule before the commission on Wednesday.

The U.S. solar industry’s been struggling in recent years, despite state mandates and federal tax subsidies. Tesla, for example, reported record losses last quarter, so mandating Californians to buy solar products is a welcomed development to the industry.

And why not? The commission unilaterally guaranteed the solar industry a strong customer base, despite the state’s already high cost of living.

Affordable housing is becoming harder to find in California, and forcing new homes to install rooftop solar panels is expected to add between $8,000 and $12,000 to the cost of a house. But the state seems determined to meet its green energy goals at all costs.

California law requires 50 percent of electricity to come from green sources by 2025. The state will also soon change the way it charges residents for electricity, billing customers based on the time of day they use power.

Such a policy would allegedly benefit homes with solar panels and battery storage over homes that don’t have them. In fact, a major selling point for mandating panels is it could help drive down electricity bills.

But many energy economists disagree. University of California-Berkeley economist Severin Borenstein wrote to the Energy Commission, urging them to abandon the policy.

“The savings calculated for the households are based on residential electricity rates that are far above the actual cost of providing incremental energy, so embody a large cross subsidy from other ratepayers,” Borenstein wrote in his email.

“This would be a very expensive way to expand renewables and would not be a cost-effective practice other states and countries could adopt to reduce their own greenhouse gas footprints,” Borenstein wrote.

Homebuilders would have to “make individual homes available with solar panels, or build a shared solar-power system serving a group of homes,” The New York Times noted, adding rooftop panels “can either be owned outright and rolled into the home price, or made available for lease on a monthly basis.”

“Any additional amount in the mortgage is more than offset,” Energy Commissioner Andrew McAllister told The Times. “It’s good for the customer; it’s good for the homeowner.”

It’s so good it had to be mandated. However, it is also good for the solar energy companies’ bottom lines.

Tesla sells and leases solar panels, and also produces “solar roofs” — convenient?

Tesla got into the solar business after acquiring SolarCity in late 2016, where Musk served as chairman. SolarCity was hemorrhaging cash before being acquired by Tesla, which many saw as Musk’s attempt to prop up a failing company he had a stake in.

Tesla also sells Powerwalls, a battery storage unit meant to be paired with solar panels. Tesla Powerwalls currently go for $6,600 per unit, but installation costs can range anywhere from $1,000 to $3,000.

The commission’s vote is further good news for Tesla, which saw record losses last quarter, despite federal and state subsidies. Tesla is having trouble meeting electric car production goals, but they expect to be profitable in the third quarter.

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