What would happen if Arizona required solar power for all new homes?

The California Energy Commission this week required all new homes built in that state to have rooftop solar starting in 2020.

The bold new requirement raises an interesting question for the Golden State's sun-drenched neighbor: What would happen if Arizona enacted such a policy?

Some new housing developments offer solar as an option, or even a standard feature, but Arizona doesn’t require the panels on new homes.

The new California regulations, which also include a variety of energy-efficiency measures like low-power lighting and insulation, are expected to add about $9,500 to the cost of a new home.

That should add about $40 to the average monthly payment on a 30-year mortgage, according to the energy commission.

But the panels are estimated to save customers about $80 a month in heating, cooling and lighting, according to the commission. That is a savings of about $19,000 over the usual 20-year lifespan of solar panels.

If Arizona passed a similar initiative, the cost would be about the same, though housing prices, in general, are higher in California than Arizona.

The value of rooftop solar would be slightly less for Arizonans, however, because energy generally costs less here. According to the U.S. Energy Information Administration, homes in Arizona paid about 12 cents per kilowatt-hour of electricity in February this year. In California, the cost was about 19 cents per kilowatt-hour.

So a system that generates 500 kilowatt-hours of electricity a month in California saves customers $95 a month there, while the same system (not accounting for weather differences in each state) would save an Arizonan $60.

Supply-demand concerns in Arizona

Arizonans have shown strong interest in solar — more than 77,000 Arizona Public Service Co. customers have rooftop panels.

But utilities here are increasingly focused on using batteries in addition to solar so that the supply of energy from solar panels can be stored and used when it is needed later in the day.

APS spokeswoman Jenna Rowell said the utility has not taken a formal position on the California requirement. Salt River Project officials didn't immediately respond to questions regarding whether they would support a similar measure in Arizona.

The new California standards don’t require battery storage for homes, but if a home has a battery, the size of the solar array required on the roof is reduced.

Some Arizona builders who focus on solar homes said California's requirement is impressive, but missed an opportunity to address the problem of matching solar power output with customer demand.

MORE: Prescott Valley community will have 2,900 homes with solar and batteries

"What California passed was incredible," said Geoff Ferrell, Mandalay Homes chief technology officer. "It is definitely the direction the country needs to move in. The issue that I’m afraid they are going to come across is the same issue we have here, that the import/export of energy is to the detriment of the grid. It is a very difficult and expensive problem for the utility to solve."

Solar creates a problem for utilities that they refer to as the "duck curve." The name is a reference to the charts utilities use to diagram their demand throughout the day.

Solar reduces demand on the grid midday because it floods the grid with electricity when the sun is shining. The graphic depiction of power demand begins to look like a duck when this happens, with demand dropping at noon, then rising sharply like the back of a duck's neck as solar panels reduce their output as the sun sinks in the sky.

Batteries can take the excess solar energy produced midday (the duck's belly), and save it to be used later in the day when power demand is high and solar panels stop producing electricity.

Both APS and SRP are encouraging customers with solar to use batteries or otherwise curtail power use during the late afternoon to address the duck curve.

"Some would argue that Arizona has an even worse duck-curve problem in terms of peak demand and peak load than California does," Ferrell said.

Mandalay has housing communities in Prescott Valley and Clarkdale where solar is a standard feature, and Ferrell said demand from customers is high.

Mandalay pairs a small solar array with a battery so that customers can charge the battery during midday, then rely on the battery from 3 p.m. to 8 p.m. This takes advantage of a special rate plan from APS that charges less for electricity during off-peak hours.

"We isolate the home and insulate the customer from those demand charges," Ferrell said. "In effect, the customer is only buying power when the utility wants us to buy power."

Hard to compare cost benefits

Meritage Homes Vice President of Innovation C.R. Herro said California's requirements make sense for consumers but it will be challenging for builders to convince buyers the options are worthwhile. Meritage offers solar as an option in Arizona.

"They are doing it wrong," Herro said of California. "Consumers will falsely believe they get more value buying used [homes]."

He said the new rules will save customers money in the long run even though it will cost more upfront.

Consumers need a clearer way to compare the total cost of the mortgage, maintenance costs and utility costs to make informed decisions, he said, and the California regulations don't do that.

He said the cost of building a home to comply with the California rules probably is $10,000 to $15,000 higher than Arizona just because of the standards for windows, lighting and insulation, with the solar costing another $8,000 to $10,000.

"The truth is it is absolutely better to build to what California is requiring," Herro said. "The challenge is that customers are not sophisticated and given the tools to make smart choices."

Opposition in Arizona

Housing experts probably wouldn't line up behind such a proposal in Arizona, though.

“Requiring solar on new homes would be a tough sell in Arizona,” said Jim Belfiore, Arizona housing analyst. “It would substantially increase the cost of a home, and the benefits aren't as great for consumers as they are in other states.”

Metro Phoenix's home building market has yet to reach pre-crash levels. Forecasts call for about 20,000 new homes to go up in the Valley this year, one-third of what was built during the boom.

Rising land and construction costs in the Phoenix-area already are making it more difficult for home builders to keep prices low enough to compete with the strong resale housing market.

“Housing prices are already among the highest the country in many California areas,” Belfiore said. “Metro Phoenix’s new home market is much more affordable, and builders will want to protect that.”

He said solar panels are an option in many Valley subdivisions.

“Our state values choice over dictation of regulation,” Belfiore said. “That’s the philosophy driving politics. I just don’t see a regulation like California’s passing in Arizona.”

Arizona lawmakers have fought solar

Any such requirement in Arizona would have to come from the state Legislature, making it even more unlikely.

Lawmakers here have not only fought initiatives that would promote solar development, but they have sought punitive measures for the industry.

When a solar super PAC launched a ballot initiative in 2016 to help encourage rooftop solar, lawmakers jumped into action and introduced two bills that would counter that measure and make solar less attractive to homeowners.

One of the measures also was punitive, seeking to add additional regulations on rooftop solar. That debate ended when both sides decided to drop their efforts and reach a compromise through the Arizona Corporation Commission.

The commission sets rules for utilities, but not building requirements like the California Energy Commission.

Arizona has a requirement set by the Corporation Commission that requires electric companies like APS to get 15 percent of their energy from renewable sources such as solar and wind by 2025, and about one-third of that is required to come from homes and businesses with rooftop solar.

Electric companies are more than meeting the state requirement for rooftop solar because so many homeowners have put solar on existing homes.

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