> The economics never worked either. An average Tesla Solar Roof costs approximately $106,000 before incentives, compared to roughly $60,000 for a traditional roof replacement plus conventional solar panels — a $46,000 premium. The payback period stretches to 15-25 years, compared to 7-12 years for traditional panels.
Yikes that’s a lot of money. For most people buying solar, I think payback period is probably the biggest consideration.
In my opinion, the Tesla Solar Roof really appealed to people who wanted good looks. They probably already have their “forever” homes and are not thinking of moving at all. It is more about the emotional attachment to this part of your home than its functional aspects. You can buy a $100 dining table from IKEA or you can buy a $1,000 dining table from Pottery Barn or you can buy a custom $5,000 dining table made from a solid piece of wood. It's the same functionality but emotionally very different.
Yeah and I think that's fine - and as I mentioned below my own reasons for installing solar panels were not just financially motivated. But the economics are also hugely important. Most people don't buy $5,000 tables, and most people don't buy Tesla Solar Roofs - the article says they sold 3,000 total in the last decade. And I don't think Tesla wants to be in the bespoke roof business - they want to be selling to the masses (or at least a sizeable well-off segment of the masses).
It also doesn't help that they seemingly had issues scaling up - and even people who were willing to spend $100K on a Solar Roof faced long delays if they were available at all in their market. Tesla's image has also shifted in the last decade, and having a Tesla parked in your driveway with a powerwall and solar roof doesn't carry quite the same image that it once did - which is important when you are relying on emotions to drive sales.
> the article says they sold 3,000 total in the last decade.
>It also doesn't help that they seemingly had issues scaling up
I think these two things were highly related. Same with the cost. They couldn’t figure out how to scale up, which kept prices high and volume low. Because of this, it really was a bespoke business. And while, it looks nice, that type of margin just is not going to provide the returns they promised investors.
Yeah, Elon's whole shtick is make things scale up that everyone else thinks can't scale up. Sometimes it works (batteries), sometimes it works spectacularly well (Falcon 9), sometimes it fizzles out because it turns out everyone else was right (tunnel boring, solar tiles).
They could have had that- if they had a standardizeable install method. Aluframes for the roofs, have bespoke solarpanels just slide in and lock up as roof over roof install. The problem there was the statics not working out
But I guess my first question is why you want solar panels at all then? For most people it’s about saving money long term first, then maybe energy independence (especially in emergencies) if possible, then just wanting to go green. If it’s aesthetics, you can do a cool roof without solar I assume.
What drove you to get solar panels ultimately and why did you go Tesla? Genuinely curious.
I have a feeling you’ll say something i hadn’t considered.
No, you're pretty spot on. It was the overlap of a couple of factors:
1. I wanted solar & batteries as a buffer for grid outages
2. I wanted to be able to offset some of my energy usage with solar
3. I wanted my roof to look nice, and personally I think solar panels strapped onto a roof don't look very appealing.
4. At the time, Tesla was one of the few names in town for an integrated solar roof.
Saving money wasn't really part of the calculus, which worked out because as the article and parallel comments note, getting a Tesla solar roof is a pretty bad decision if one of your primary factors is cost or saving money on your electric bill.
I mean, if your goal is to absolutely maximize the number in your bank account, no. But then there are other things you could be doing too -- you can do the math and cover all your nutritional needs for under $1 a day, by eating mostly potatoes. But most people prefer to spend 20x that much and have food that tastes decent. And a handful of people will spend 30-40x that to have really nice food.
If you think about money as a tool to maximize your "joy", then whether the Solar Roof is worth it completely depends on your preferences and your financial situation. Most people are fine with black panels; but if you have the money and like the look of the tiles, why not?
I don't get it. If it's cheaper to have a nice traditional slate/cedar roof and just buy my electricity from the grid then why would I want solar tiles? Just to tell my friends how I'm saving the planet? It's not like solar tiles have a monopoly on electricity or nice roofing materials.
Solar Roofs can still pay for themselves, it's just a much longer pay back period than with commodity panels. So I guess the Solar Roof strikes a balance between economic benefit and design that makes sense for some people.
> Just to tell my friends how I'm saving the planet?
This is a really uncharitable framing that I often see repeated that wealthy people are only motivated by how other people perceive them. And sure, that probably plays a part for some people. But maybe they just feel good about saving on their electricity bill in the long term and reducing their carbon foot print - even if it's not the most economical or environmentally friendly option available?
It's possible the math works out differently for people whose roof already needs to be replaced, or for people whose roof can be nearly totally covered with generating tiles.
In my case, it's been a while since I crunched the numbers but the pay back period is effectively infinite, assuming that had I not bought the roof I'd invested the money instead. This is especially true as temperatures continue to swing more and more widely (winters that push below the efficient window for my heat pumps are murderous on my banked solar energy) and more states and electric companies switch from net metering to newer rate plans.
If it was just about good looks, they could have built large panels with smaller tile style panels integrated on top of them and then used faux tiles to cover the gaps without having to actually connect them electrically.
It's even worse than that. They're making the comparison of a solar roof to a new standard roof plus solar panels, but most people absolutely do not replace their roof when they get panels so the cost difference is more like 106k vs 30k.
There are companies that will install solar shingles into your roof and they only need to remove tiles in the places where the panels will be installed, so the Tesla Solar Roof is expensive even compared to an aesthetically pleasing roof.
In both cases I'm somewhat curious why seemingly no middle-man 'free solar roof' companies have sprung up where they install it with some sort of arrangement where the panels are free, but they get 90% of the generated revenue until it's paid itself off and then some. So you get a small electricity discount for many years and then eventually a much larger one, and free panels on top.
If they can work out the economics to the point that it's more viable than something like treasuries then I don't see the issue? Of course there's some potential market and other variability, but if this business model is sound then Lloyd's is there to insure it?
Something like this exists with PPA solar leases, and with home batteries.
But it’s usually a bad deal for the homeowner compared to a more conventional lease or purchase with a fixed rate. The incentives don’t match up, there is also the issue of the lease buyout if the home is sold.
I would love some kind of solar, but when I know how cheap it is to install it in places like Africa AND use cutting edge chinese solar/battery tech, my enthusiasm to pay a USA premium makes me just close the tabs. It's too expensive in america for some reason.
I agree it's frustrating. But shouldn't your decision be based on whether it makes financial sense for you, and not whether someone else in a completely different market with a completely different cost structure is paying a lower price than you?
IME a lot of the difference between solar for the US vs Europe for example, is that the energy usage in the US is way higher (often due to HVAC usage), so you just need much larger sized systems than in Europe if you want to cover your usage fully. Our house here in NL is 3.5 kWp, people I know in the US have more like 20-30 kWp.
You need to shop around. Problem is solar companies just hiring contractors with little value add. Spend some time looking for contractor yourself and you’ll easily save 30%.
> "requires on-site renewable electricity generation for new homes in England — solar PV covering around 40% of ground floor area where feasible"
As well as an end to new gas boilers, replaced with a heat pump mandate.
> The estimated build cost increase is around £4,350 per dwelling. FHS-compliant homes are projected to save homeowners around £830 per year on energy bills compared to a typical EPC C home
That .. looks rather different to a $100k gold plated roof.
You're comparing apples to oranges, at least a bit. $60k for a roof plus solar is going to be for a larger US home compared to a UK home- probably in the 3000 sq ft range, unless it's a very steep roof with lots of dormers or corners. Also, the cost savings for the UK home are due to much higher energy prices- the cost savings would be much smaller in the US.
With that said, Tesla's Solar Roof is definitely the gold plated unreasonably out of touch option.
OTOH solar is a lot less useful in the UK than in the US. The southern tip of the UK is north of all the major Canadian cities, in the depths of winter we get about 6 hours of daylight with the sun barely reaching 20 degrees above the horizon. The winter is also where most electricity usage is too, doubly so when you want to replace gas heating with a heat pump. No AC and summer daylight past 10pm means that residential electricy usage in the summer, when solar does make sense, is very low.
Meh, I've had people come out to give me a quote for rooftop solar and they told me not to bother. Between the latitude (upper Midwest) and tree coverage shading parts of the roof throughout the day, it wouldn't pay off in a reasonable time line.
Mind you, that's with having AC, electric laundry dryer, a private well pump, septic heater and all sorts of other energy hogs trotting about the place throughout the year. I'm not exactly living an ascetic lifestyle myself.
Maybe if I paid the UK's electricity rates it'd be different though.
What's the capacity though. Either way this seems extremely high unless we are talking in terms of like 100kw or something. For reference, I recently installed hybrid/net-metered system set up at my home in India; 7kw solar with a 20kWh battery for around $10K. The biggest cost is for the batteries though. The panels themselves have become extremely low price and the prices continue to fall.
It's interesting to see Tesla's solar business getting disrupted by Chinese manufacturers after EV.
> I would expect around 50k-60k for a 1000 sq ft roof (not US).
That's about 90 m². Here in Germany [1], if it's just replacing tiles, you're looking at 10k, add 20k for adding heat insulation - and you can get 15-20% back with government assistance from that sum. The only way you reach 50k in costs here is if you have to fix structural issues (e.g. rotting wood due to water ingress, but if you take proper care of your roof you won't need to do that - expected life time for roofs is about 80 years for the tiles and much more to the tune of centuries for the wood framing.
I included the structure because I only know of cases (including my own) where both needed replacing. Centuries for the wood structure is hypothetically possible of course, but only if maintenance is ideal (no water ingress) and without insects. Once there are water issues, they rapidly decay. Retrofitting both new insulation and additional roof loads like solar is also not possible for every old roof structure. The flat roofs somewhat common in 60s and 70s construction also have very short lives and often need to be replaced wholesale after 40-50 years. Despite the reputation, they're not at all cheaper than traditional roofs, at least not when you have to adhere to the current building codes
A bundle of shingles is $50, 3 bundles to cover 100 sq ft is $1.50 sq ft in materials. Figure $1.50/sq ft to demo and dispose of the old roof shingles.
Materials and demo comes out to $3,000, figure $500 for tools and nails, mark it up to $4,500-5,000
Probably (4) people can knock out a 1000sq ft roof in an 8 hour day, call it 40 hours of labor for demo and install.
Surely the labor cost and markup is not $1,000 an hour, that’s what it would have to be for a 1000 sq ft roof to cost $50-60k. $125/hr for 40 hours is $5,000.00
Are these payback periods factoring in opportunity cost? If not the game is already lost. If so periods that long are so sensitive to alternate asset returns that they could easily be infinity.
No - these numbers likely do not factor in opportunity cost. And yes, you can probably earn a better return elsewhere. But the reasons that I installed rooftop solar were:
* Diversification. These days stocks, bonds, real estate, crypto, and even precious metals are increasingly correlated [1]. Solar panels offer pretty consistent returns regardless of what is happening in the stock market.
* Backup power. I live in an area that is prone to natural disasters. Having a backup power source gives me a bit of peace of mind.
* Hedge against increasing energy prices. My solar panels have actually performed better than I expected due to electricity prices increasing faster than I expected.
* Clean energy. When I turn on my A/C in the summer I take some enjoyment from the fact that it's powered by the panels on my roof and not burning fossil fuels.
* Entertainment. I enjoy nerding out and learning about the tech, monitoring output, etc. A lot of people think solar panels are ugly but I actually like the way they look.
Yes the S&P 500 would have returned signficantly more than my solar panels. But I already have a lot invested in the S&P 500, solar panels were fairly inexpensive and don't make up a significant portion of my overall investments, and the psychological benefits outweigh whatever opportunity cost I have incurred.
There is also the option to finance them. You need to be careful with financing, as I think there are a lot of predatory offers out there. But if you are buying or building a house, for example, and can roll the cost of the panels into your mortgage, then that's going to reduce the up front cost and hence the opportunity cost.
But yeah when you get into the $100K range for a Tesla solar roof, then I think that starts to be a pretty substantial amount for most people that can be better spent elsewhere. Not to mention the delays, customer service issues, etc that people have experienced with Tesla - which can easily offset any peace of mind benefits.
I'm in the same camp as you. I'll add that my panels are returning 16% on capital spent, and it's going up as electricity prices go up.
So, yes, I could probably get a higher return if I invested that capital elsewhere, but, apart from the diversification, I get benefits beyond the raw financial return.
Firstly, earlier this year, we had a cable coming into the house fail. By the time the electrician and city had done all they needed to do to sort it out, almost 4 days had passed. We would have been without power for that time. As it happens we ran completely on solar for that period - freezers stayed frozen, could run the laundry, etc. Some stuff was limited (no oven, no hot water) but the impact was minimal compared to what it might have been.
Secondly, during the day at least, I'm not really fussed about electricity usage. If lights are on, or AC is on or whatever. So there's less "hey, that light is costing money" etc. So we end up using more electricity, but the marginal cost (during the day) is 0. My next car is electric (already on order) and that can charge at home as well (during the day, I work from home) and so that just increases the return (utilization of available power goes up.)
From a financial point of view, for me, it's a no-brainer. Obviously ymmv - everyone's numbers are different. For me the payback is in the 5-6 year range (probably under 5 once the car comes online.)
In an average year (not the past 4), 16% would be amazing. That it’s effectively guaranteed and will almost certainly increase every year is icing on the cake. I’d take that trade any day.
Not OP but I'll run what I plan on doing. In Germany you can get a plug-in ready kit with 2.2 kWh battery and 920W panels for less than 600€ [1]. The panels are about 1.8 m² each (=3.6 m² total), so with on average 1.200 kWh/m² solar radiation and 25% efficiency I'm looking at up to 1080 kWh in energy I'll get out of the system per year.
Electricity here in Germany is expensive at an average 30 ct/kWh, so the panels save 324€ worth of electricity - an ROI of > 50%. Choose some better quality for the inverter and battery and you'll still be north of 30% ROI.
The key thing making this high ROI possible is that it's small. Counterintuitive, yes - but explained by the fact that for larger installations than that, setup costs go up: you need to install the panels on your roof instead of hanging them off your balcony which can be thousands of € in labor, you need to run new power wires...
Your numbers are likely off by about half (in Germany your sunlight is less than 1200w/m2, panels are more like 22% effecient, you'll gave at least some cloudy days, your panels won't be tracking the sun.)
But a small system is still going to bring a return and is cheap to install. And it'll give you a real way to understand the concept and to experiment.
I started with a 660w small system, and it gave me lots of insight for planning my current system.
The inverter keeps a log of electricity generated, used, battery used, imported and so on.
I put that in a spreadsheet which calculates money saved. (Which is reasonably complex because of pricing tiers although fortunately I don't have to deal with daily pricing changes.)
Then some math returns the return on investment per month and per year.
Do you also subject the cost of upfront capital? Example: Imagine that you didn't have the upfront captial, and you needed to borrow it "from a bank" at X% for Y months.
Opportunity cost meaning investing with standard rule of thumb returns? I think usually it's just total cost at installation divided by the product of power generation and energy cost. So that's $ / (W x $/Wh), which should reduce down to just hours that can be trivially converted to years
> Cost of alternative investments not pursued as a result of deployed capital.
Once you’re achieving 30-50% annual returns over 20-30 year horizons (PE, HFT, invite-only HF) , you stop caring about cost of capital for anything less than US$1 million.
But 10% VTI / VOO, sure, factor that 10% into your excel.
Yikes that’s a lot of money. For most people buying solar, I think payback period is probably the biggest consideration.