California’s Suicide Attempt, Part 6: Let’s Make Housing More Expensive!

Not sure whether this item deserves to be filed under “California’s Suicide” or our “Green Weenie” category.  Apparently California’s governing class thinks the cost of housing isn’t high enough, because the state government has just mandated that all new housing starting in 2020 must come with rooftop solar power.

You have to be rolfing roofies to think mandated rooftop solar makes any sense. MIT’s Technology Review notes: “The new rule could add more than $10,000 to the costs of building a home, raising the price tag in what’s already one of the most expensive states to purchase housing.” For California’s virtuecrats, that’s probably a feature, not a bug.

Of course, the green virtuecrats say that home buyers will ave more money on the long run with lower electricity bills. Yeah—and I have a solar-powered bridge in Brooklyn I can see you real cheap.

The proposal was rushed through in great haste, likely because the zealots know that a careful consideration of the proposal will reveal it to be unsound, even as a means of increasing electric generation capacity. Severin Borenstein, a professor at the Energy Institute at the Haas School of Business at UC Berkeley, sent a letter to the California Energy Commission criticizing the policy:

Dear Commissioner Weisenmiller:

I just became aware in the last few days of the proposal in the new building energy efficiency standards rulemaking to mandate rooftop solar on all new residential buildings. I want to urge you not to adopt the standard. I, along with the vast majority of energy economists, believe that residential rooftop solar is a much more expensive way to move towards renewable energy than larger solar and wind installations. 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. This would be a very expensive way to expand renewables and would not be a cost-effective practice that other states and countries could adopt to reduce their own greenhouse gas footprints.

Because I, and most other economists studying California’s energy policy, just became aware of this proposal, we have not had time to participate in the policy process or write public documents on the subject. At the least, I would urge you to delay adopting such a rule until independent analysis from energy experts can be made part of the record.

Borenstein, by the way, is the person who calculated that the tax credit for buying electric cars was a huge subsidy overwhelmingly going to rich people, as the Washington Post reported in 2015:

NEXT TIME you see a fancy new electric car, ask the owner for a ride. After all, you helped pay for it. The federal government provides a $7,500 tax credit for buying or leasing electric vehicles, which means that it transfers that much money from everyone else to the relative handful of Americans who have so far purchased a plug-in vehicle. . .

Electric-car purchasers tend to be upper-income, and the credit is non-refundable — meaning its value increases as your income tax liability increases (up to the $7,500 maximum). It’s worth nothing to lower-income folks who don’t owe federal tax. And even if it were fully refundable, lower-income people would rarely qualify because the cars would still be too expensive for them. Some 90 percent of the credit’s benefits accrue to the top 20 percent of taxpayers, according to a 2015 study by Severin Borenstein and Lucas Davis, economists at the University of California at Berkeley. . .

Anyway, as Technology Review notes about the new solar housing proposal:

But this feel-good change to the building code is a questionable public policy for cutting greenhouse-gas emissions. The big problem with the California Energy Commission’s new mandate—which passed on May 9 and goes into effect in 2020—is cost. . .

In fact, residential solar systems cost between 12.9 and 16.7 cents per kilowatt-hour averaged over their lifetime, according to a National Renewable Energy Laboratory report last year. That’s more than double the cost of utility-scale solar systems, which range from 4.4 to 6.6 cents. . .

California has already made giant strides in adding renewable-energy generation, which has started to create its own set of problems. On very sunny days, the state’s solar plants can generate more energy than the system is able to use, pushing prices into negative territory (see “Texas and California have too much renewable energy”).

It’s official: California is governed by idiots. And it’s only likely to get worse after the next election.

Responses

Books to read from Power Line