California became the first state in the U.S. to take the initiative of making all new homes “net-energy zero” by 2020. The energy required to run the home can be self-generated in the form of renewable energy. While this seems to be an ambitious move, California has already put enough measures in place to make the goal a reality. Under new state law, all homes are required to install solar roofs, effective from January 2020. vHomeInsurance took the initiative to understand the effect of these measures and the potential impact of solar homes on homeowners’ insurance.

California stands at the forefront when it comes to the capacity of solar cells installed. It has already installed solar cells with a total capacity of 25,773 MW. This is almost five times more than the second-ranked state North Carolina, which has solar cells with a total capacity of 5,601 MW. Moreover, the California Solar Initiative run by utility companies offers several incentive programs to homeowners to motivate them to install solar power systems. Of all the programs, SASH (Single-Family Affordable Solar Homes) and MASH (Multi-Family Affordable Solar Homes) made a considerable impact in driving many homeowners to install solar panels in their homes.

SASH (Single-Family Affordable Solar Homes) Program

The SASH program, run by GRID Alternatives, is a non-profit organization based in Oakland. The program focuses on low-income households and motivates homeowners to install solar panels by offering them incentives. California homeowners enrolled in the program earn an incentive of $3 per watt of solar power generated. To be eligible for the program, homeowners should meet the following prerequisites:

Should receive electrical service from Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas and Electric (SDG&E).

Should have a household income that is 80% or less than the area median income (AMI).

Should own and live in homes defined as “affordable housing” by the California Public Utilities Code 2852.

So far, a total of 8,228 systems have been installed in California through the SASH program, with 198 projects waiting to come into effect and 256 applications under review. The program has already received $124 million in incentives and accounts for 26 MW of solar capacity in California.

MASH (Multi-Family Affordable Solar Homes)

The MASH program is run by Program Administrators of the General Market CSI Program- Pacific Gas & Electric Company, Southern California Edison, and The Center for Sustainable Energy in San Diego Gas & Electric Territory. Like SASH, this program also focuses on low-income households, providing them with an opportunity to earn extra money along with helping the cause of the Go Solar California campaign. The program offers incentives on two levels under Track 1C and Track 1D. Households having VNM (Virtual Net Metering) with greater than or equal to 50% tenant benefit fall under Track 1D and earn $1.80 per watt. On the other hand, households under Track 1C earn $1.10 per watt.

The program is temporarily paused and does not receive any new applications. However, the program already has 480 projects in place across the state, generating 41.9MW of solar energy. Around $162.3 has been paid in incentives to California homeowners for completed projects.

ITC (Investment Tax Credit)/Federal Solar Tax Credit

Apart from the incentive programs, the Federal Solar Tax Credit scheme also encourages California homeowners to install solar panels in their homes. Under the current scheme, homeowners across the country can get a refund of 30% in the form of a tax credit for installing solar panels in their homes. The Federal government has also announced that the tax credit will be lowered to 26% in 2020 and to 22% in 2021. By 2022, the scheme will be limited to commercial solar installation projects with a tax credit of 10%.

Home Value and Insurance Coverage Of Solar Energy Systems

Installing solar energy systems can significantly increase the value of homes. Home value of California homes installed with a 3.6 kW solar energy system increases by up to $15,000 from its standard home value. On the other hand, the home value of non-California homes increases by up to $11,000 from their standard value on installing the same 3.6 kW solar energy system.

As the value of the homes increases, homeowners will have to rethink about increasing the coverage value of their insurance policy. Increasing the coverage value means that the homeowners will have to pay a higher insurance premium for their policy. Most standard home insurance policies will cover rooftop solar energy systems. However, if the home is equipped with solar panel carports or ground-mounted panels, California homeowners might need to opt for an add-on policy.