Lompoc wants the California Energy Commission to exempt the city from the state’s renewable energy mandates for new homes.
The Energy Commission’s 2025 code for new construction requires photovoltaic solar and battery storage systems on homes to reduce wasteful and expensive energy use. However, under the state’s economic model, Lompoc residents wouldn’t be saving as much money as predicted because the city’s utility is publicly owned.
To fix the discrepancy, Lompoc City Council members voted at the March 3 meeting to ask the state for a waiver that would give developers the option to pay a fee into the public utility fund instead of building solar and battery storage on every new home.
“It provides a more affordable compliance path and allows the city to still invest the funds in local energy projects that can benefit all ratepayers,” Michael Loew, Lompoc’s chief building official, told the council.
Unlike most cities, Lompoc’s energy is a publicly owned utility with lower rates.
The state calculated that new solar homeowners would save $0.20 per kWh, but in Lompoc that figure is only $0.07 per kWh.
“This 65 percent reduction in the homeowner benefit means that the state’s cost effectiveness conclusions do not hold true for our city,” Loew said.
It costs an estimated $25,000 to install solar panels and battery systems, according to Loew, which is usually financed through a homeowner’s 30-year mortgage. Over that period—with a “conservative” interest rate of 5 percent for the sake of calculation—the resident would pay more than $48,000 over the mortgage term.
“My analysis projects the total lifetime energy benefit or savings for that homeowner to be less than $9,000, so the problem with the state’s policy is that the homeowners would not recoup the capital investment,” Loew said. “It increases the upfront costs of new construction.”
With the more than 2,000 new homes being built in the next five years, as outlined in the city’s general plan, there could be a total of $78.7 million lost by Lompoc homeowners over the course of three decades, Loew explained.
“We have no benefit in our cost structure. We don’t have a way of subsidizing anybody that goes on solar,” Councilmember Victor Vega said at the meeting. “So basically, it’s not a good investment for someone to do that here.”
In addition, if all new homes generated their own solar power, Lompoc would sell less electricity and lose revenue. Loew estimated that the Utility Department would see an annual deficit of $610,000 as a result of the 2,000 planned new solar-powered homes. The loss could cause the city to cut services or increase electricity rates, he added.
City Council members are expected to formally adopt a resolution to file the petition in April.
This article appears in March 12 – March 19, 2026.