Tesla Solar Roof Resurfaces: Is It Worth It?
Just when you'd nearly forgotten all about it, Tesla's Elon Musk appeared to give you all the new details on the company's solar panel offering.
I mean, I guess some of the details were new.
A lot of the information we got was the same: the tiles will come in four styles, will be paired with Tesla Powerwall batteries, and will supposedly reduce your energy bill so much that the roof will basically pay for itself.
It’s that last one that should give you pause.
There’s a reason you don’t hear about amazing rooftop solar installations in the mainstream media these days, and it all comes down to the promises the first companies made...
The Good Old Days
Just a few years ago, companies like First Solar, Vivint Solar, and SolarEdge were flying high on the promise of a booming rooftop solar industry.
The states offered massive tax credits for homeowners to install solar systems onto their homes, and in the wake of the COP-21 meeting that put the entire world on notice for emissions reduction, the U.S. government extended the solar investment tax credit (ITC) through 2022.
In 2015, solar IPOs were cropping up left and right as new companies jumped on the bandwagon.
A year later, there was practically nothing left...
Solar investments took a nosedive when people realized rooftop solar wasn’t the energy-saving miracle it had been advertised as.
Hundreds of companies went bankrupt or simply shut down; Sungevity joined them just this year.
Even SolarCity’s popularity couldn’t save it! The company was lucky to have had a partnership with Tesla Inc., which acquired it last year.
Others that didn’t go under entirely lost a lot of value in the downturn:
(Click Image to Enlarge)
But looking at the global numbers behind solar, you’d probably never guess this was the case.
Solar capacity around the world is growing every year. Estimates from SolarPower Europe put global capacity at 305 gigawatts as of March, and more installations are going up as you read this.
Currently, solar accounts for around 2% of the world’s total energy consumption. That may seem like a drop in the bucket now, but it’s just the beginning of what some expect to be the largest energy source by 2050.
So if solar around the world is seeing this kind of massive growth, why are companies still struggling?
The biggest piece of news we received about Tesla’s solar roof is how much it will cost: $21.85 per square foot, which Musk pointed out is competitive with many traditional roofing materials. And they don’t produce energy for you, now do they?
Of course, the value of this kind of “deal” varies a lot more than Musk seems to realize.
The one thing keeping solar down even today is efficiency. The best solar panels in the world only produce around 30% of their nameplate capacity, and that’s in a controlled environment.
Take into account:
- Normal wear and tear
- Unavoidable weather
- Inevitable technical failures
And that’s not to mention that the amount of sun your roof gets, based on its size, angle, and the direction it’s facing, cuts into possible solar energy collection in a big way.
In the end, only those in the sunniest places will see returns on their rooftop investments. Those who are out of the sun are also out of luck.
I mentioned last year when the panels were first unveiled that Tesla was going about this backwards: looks first, functionality later. And unless the company has somehow made these panels twice as efficient as every other panel on the market, I still doubt the viability of this plan.
Not that people won’t buy it, of course. Just that the value they’ll get out of it remains to be seen.
However, Musk has already covered all of his bases where solar is involved.
See, what's bringing solar capacity up even as solar stocks take a dive is the fact that solar rooftops aren’t the answer. It’s large-scale utility solar that’s seeing the biggest gains.
Larger installations can be placed strategically in sunny places and can include swiveling panels that adjust to follow the sun all day long. As for pricing, it becomes a matter of utility or community payments rather than debt added to an individual home.
Tesla is in on this business, too, as are a number of beleaguered solar companies looking to get back into the fray.
Solar Saving Itself
The solar industry is far from dead. In fact, now that the hype has died down, this may be the perfect time to take advantage of discounted prices on promising stocks.
And keep in mind that individual solar installers aren’t the only option. Energy storage tech will be continuing its ascent as renewables of all sizes become more common, bringing battery makers and lithium miners to the forefront.
Even languishing rooftop solar isn't a lost cause yet! But it's definitely going to need some improvements beyond new, pretty panels.
Until next time,
Energy and Capital
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