California's Affinity for Expensive Mandates

Last week, the California Energy Commission voted unanimously to approve a mandate that requires all new homes to be built with solar-equipped roofs. This regulation will exacerbate several important problems-- chief among them the further increases to California’s already exorbitant housing costs. But worse yet, as the Los Angeles Times reported in February 2017, California is already paying billions for excess energy production that it doesn’t need.

 

 

The fact that government regulators just approved a new mandate that will create even more unnecessary power in the state, while not surprising, is beyond reckless.

 

Mandates are the antithesis of a competitive market, because they remove the incentive to beat industry competitors through innovation and efficiency. This mandate not only reeks of cronyism from the solar industry, but also ignores the fact that California is already leading the shift to clean energy.

 

In 2017, 30% of California’s power came from clean energy— a number that has steadily increased each year, in part due to the state’s aggressive renewable portfolio standard. Much of this energy has come from solar power, and the solar industry now employs over 250,000 Californians.

 

While the progress made by solar energy is notable, it does not deserve to be the sole source of government-approved power in the state. Through this new mandate, California regulators arbitrarily declared that solar energy is better than wind, hydro, or nuclear— a classic case of choosing winners and losers.

 

Instead, California should have sought an “all of the above” approach to energy, which is an effective way to drive down costs while promoting innovation on an equal playing field.

 

While this maneuver is par for the course in California, there are numerous examples where opening energy markets to competition can more efficiently accelerate the growth of clean energy. Instead, California’s regulators should have looked to states like Texas, where 85% of households have access to competitive energy markets.

 

Rather than rely on mandates that distort market signals, Texas has become a national leader with a model that empowers consumers rather than government bureaucrats. This competitive model is a large reason why Texas has become the nation's largest wind energy producer by a 3:1 ratio.

 

California, like Texas, is an important part of the American economy, and California has long been a hub for both technological and environmental progress. The state’s economy has the power to drive a monumental shift in energy production. In fact, many of silicon valley’s biggest names have already transitioned to 100% renewable power. Companies including Google, Apple, and Salesforce have all voluntarily made this switch—without a government mandate requiring them to do so. The reality is that private enterprise that has accelerated this change—not the government.

 

California would be wise to leverage its powerful economy to foster innovation and make clean energy even more cost effective and efficient. Mandating that developers install costly solar panels on new homes is not only unnecessary, but for those who already struggle to afford housing it the state, it is simply unfair.

 

The flaws in the mandate, which boil down to little more than a “feel good” policy, ignore the economic reality of energy markets. If we’re focused on a smart transition to America’s new energy future, a mandate like this simply does not make sense.

Nick Lindquist