It’s a common concern that has dominated industry headlines throughout the year. If you’re in the business of new home construction, you know all too well that building costs have skyrocketed since the pandemic began.
Concerns over supply chain issues, tariffs and labor shortages are just a few of the factors driving up construction expenses. In a commentary provided by Fannie Mae, the price to build a 4-7 story apartment building has increased approximately 8.3% since 2020. Despite growing expenditures, experts expect the multifamily sector to continue trending upwards as renter demand remains steadfast.
With no clear path of cost relief in sight for multifamily builders, it’s safe to say that every cent counts now more than ever. So how can multifamily developers maximize profit? One major way to offset higher costs is by adding new assets that bring in more income. A properly designed, on-site solar system is a great example, producing new income for decades.
Through virtual net energy metering (VNEM), long term gains can be generated from solar. With VNEM, solar generation at multifamily rental properties is converted into utility bill credits and allocated to each meter, helping builders boost their net operating income and share savings with tenants if they choose. In this way, money saved from utility expenses is great for the builder’s bottom line and touts an attractive amenity for renters looking to live sustainably. VNEM can be fully explained to you by a SunPower energy consultant.
But beyond the long-term cost savings that solar energy brings to the table, SunPower can guide you on what incentive programs are available based on your location. For multifamily builders in the Golden State, three new incentive programs have recently made their way into the spotlight.
The Building Initiative for Low-Emissions Development (BUILD) is a program through the California Energy Commission (CEC) that provides builders with incentives for all-electric, low-income residential buildings that reduce harmful carbon emissions. BUILD focuses on providing renewable energy technologies in affordable housing developments. Awards up to $2 million are available to each applicant and include a kicker incentive for additional clean energy technologies such as solar storage.
Energy-Smart Homes program
The Energy-Smart Homes Program is organized through the California Public Utilities Commission (CPUC) and provides incentives for all-electric new home construction. The program has $12 million in incentives for builders each year through 2025, and there’s an extension option available. Even better is the fact that it can be layered with other programs like BUILD. Applications for this program are currently being accepted.
California Electric Homes program
Currently under development, the California Electric Homes Program was created to incentivize electric buildings and energy storage. It is expected to launch with $58 million allocated in its first phase. Overarching guidelines for the program are expected within the month followed by a public comment period in late 2022 or early 2023. The SunPower team is working closely alongside this particular incentive program and will keep builders up to date on its progression.
For many of the incentive programs above, being compliant with California’s Title 24 energy code is a prerequisite. The mandate states that solar panels are required on all new residential construction three-stories or less. SunPower’s multifamily construction experts work with architects and builders alike to bring the world’s best solar technology to their units while helping them avoid costly pitfalls. In other words, SunPower is all about helping builders save money.
With over 80,000 new home solar installations and counting, it’s easy to see why SunPower is trusted by the nation’s leading homebuilders like KB Home, Toll Brothers and Meritage Homes. We offer industry-leading whole home renewable energy solutions from solar storage to EV chargers, and our solar panels are rated for the highest efficiency and durability. If you’d like to learn more about how to maximize your investment with solar energy, contact our team.