Earlier this decade, the rise of third-party solar upended the U.S. residential solar market. Leases and power purchase agreements allowed companies like Sunrun, SolarCity, Vivint and Sungevity to provide rooftop solar to the masses in a way that eliminated the big up-front costs and credit checks associated with buying a $30,000 attachment to your home, and rapidly became the dominant business model.
But as loans got more sophisticated and Tesla moved SolarCity away from its path of aggressive sales and growth, the third-party solar market contracted. Currently the space has several successful companies, but most residential solar is sold through loans and direct purchases, and market leaders Sunrun and Vivint are plagued by ballooning customer acquisition costs.
As usual, Tesla is charting its own path. In a series of tweets on Sunday morning, Elon Musk revealed a new strategy: renting solar. The company is offering to rent homeowners a small, medium or large PV system, at $50-$195 per month, for systems ranging from 3.8 kW to 11.4 kW in capacity.
On Twitter, Musk was characteristically bullish about the ability of the offering to save customers money, estimating that this will save customers around $500 annually.
With the new lower Tesla pricing, it’s like having a money printer on your roof if you live a state with high electricity costs. Still better to buy, but the rental option makes the economics obvious.
— Elon Musk (@elonmusk) August 18, 2019
The rental option eliminates any long-term contract, but there is a charge of $1,500 to remove the system at the end of the rental period. Which may explain why other companies have not yet tried this option: A PV system is a semi-permanent attachment, and not exactly easy to remove once installed.
Solar rentals are currently only available in the service areas of 20 utilities in six states, and the Powerwall battery is not available in the rental deal.
The launch of the solar rental option comes directly on the heels of Tesla’s move to sell solar through its website, and like the rental option, the internet purchase option shows substantial savings through eliminating sales and many kinds of transaction costs. And while Tesla provides a calculator to show customer savings, it remains to be seen if the cost savings and ease of transaction alone will allow these options to turn around Tesla’s contracting share of the rooftop solar market.
In the second quarter of 2019, Tesla installed only 29 MW of solar – a fraction of its market share when SolarCity alone was responsible for around one-third of the U.S. residential solar market.
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What needs to be overcome is our sales process in the US. The absurd amount of sales cost fundamentally changes the economics of the product while simultaneously holding back vital information and transparency from the marketplace.
Eliminating door to door sales was step one.
Providing open online pricing was step two.
Allowing some clients to access the ease of a lease model is step three.
Now they just need to improve service and continually tweak the above.
The first deal I could afford. But – not even available in Virginia, where I am an electrical co-op member, now\ paying 15 cents per kwh. Also, would want a power wall, but see that is extra. Wonder how much that is? Also, would rather have panels in the back yard, away from trees. SIGH.
Can this workforce my 2016 Montana 5th Wheel, Model 3820FK? Needs 50 am service.
Please respond to donald.nopp@gmail.com
Thank you
Don Nopp
In uk I fit for around £1.20 and down to .65pound for 100kw or more.
Whyis USA more?
@John Fry, what are your soft costs in the UK? There is no consistency in the U.S.. You can find deals for solar PV kits online that sell in the U.S.. some of these companies will produce a line drawing for the system geared to your particular local codes and of course the NEC. But from State to State and sometimes county to county the soft costs add thousands to the installation. Sometimes, one has to have an engineer for civil and electrical sign off on plans before they can be submitted to the county and or city code folks, before a construction permit is allowed. The professional engineers signatures are running from $500 to $1,000 each. One thousand to two thousand U.S.D for an O.K. I would much rather put in $2k more solar PV or put this money towards energy storage. The ‘proper’ inspections are included in the building permit, these costs are not consistent either. Some are relatively cheap, some are expensive depending on area and local codes.
Teals isn’t exactly trying ‘everything’ to expand solar. I’ve had my Model 3 15 months now and haven’t received as much as an email offering to bundle solar with my (great!) M3. Marketing 101, sell more to your existing customers. Missed easy opportunity.
Tesla screwed the pooch here by cutting sales people who were selling lots of systems. The idea that many people will go to a tesla shop or even via internet to get solar is like thinking many people will decide to go to a store to buy a gardening service or contractor. Sure, they may look online, but in the end, someone coming and evaluating the roof and explaining benefits works.
I like this “rental” idea, but why not make it a lease? At the end, you can buy it for $1500 and it stays on the darn roof?
I wanna lounch this solution in pakistan please tell me.