As a market segment for solar photovoltaic (PV) adoption, new homes have a number of attractive attributes. Homebuyers can easily roll the cost of the PV system into their tax-deductible home mortgage and, with rebates and other financial incentives, potentially achieve an immediate net-positive cash flow from the investment. New homes are amenable to building-integrated photovoltaics (BIPV), which are less susceptible to aesthetic concerns than traditional, rack-mounted systems. The performance of PV systems can be optimized on new homes by taking roof orientation and shading into account when designing the home. Perhaps most importantly, subdivisions with PV systems installed on a large number of homes offer potential cost savings from volume purchases of modules and inverters and from scale economies in system design and installation. Finally, the ability of builders to install PV as a standard feature on multiple homes in new subdivisions offers an opportunity to circumvent the high transaction costs and information-related market barriers typically confronted when each individual homeowner must make a decision about installing PV. Builders may benefit in several ways from incorporating PV into new homes. Builders may gain greater market differentiation, enhanced media exposure, and less community or political opposition to development projects. Additionally, if homebuyers place a high value on PV, builders may be able to earn additional profits, just as they would on granite countertops or other high-value home features. Although the impact of PV on the original sale price of new homes has not yet been rigorously examined, some limited empirical evidence does suggest that PV and energy efficient features may have a positive effect on resale value. Along with its unique advantages, residential new construction also faces unique barriers to PV adoption. Most fundamentally, perhaps, is the general aversion to technology risk within the building industry, particularly in ''hot'' housing markets where builders face little difficulty selling homes. Builders may also be concerned about the up-front cost of PV and its impact on new home prices and profits. The potential for project delays associated with PV module availability, installation scheduling, utility interconnection agreements, building inspections, permit processing, or other factors, may also be of great concern. Finally, many builders may believe that most homebuyers are not particularly interested in PV, given its cost, and that some may even be opposed based on concerns about aesthetics, maintenance, or reliability. In this paper, prepared on behalf of the Clean Energy States Alliance (CESA), we describe early efforts by state clean energy funds to support the deployment of PV in new, market-rate homes. (Other recent reports prepared for CESA describe experiences with programs targeting affordable housing.) We focus on the activities of clean energy funds in nine states that have funded specific projects and/or have offered targeted programs for PV in market-rate residential new construction. We also include in our review several other state or local organizations whose efforts are particularly noteworthy or have some direct bearing on the efforts of clean energy funds in the same state--however, we do not attempt to comprehensively review the activities of entities other than state clean energy funds.
