Published on August 2nd, 2018 | by Carolyn Fortuna0
Tesla Energy — Rapid Growth In Solar Roof & Energy Storage Demand Outstripping Supply
August 2nd, 2018 by Carolyn Fortuna
We all know that Tesla’s all-electric car catalog is really, really cool. Who wouldn’t want to have a Tesla Model S, X, 3, and/or Roadster in her garage? But Tesla’s energy products also have great potential to hasten the world’s inevitable shift towards sustainable energy.
Yesterday’s Tesla shareholder letter and accompanying conference call outlined, in part, the current status of Tesla energy products and the future of this component of the company. As utilities, energy companies, commercial entities, and homeowners quickly realize the benefits of battery storage, the picture will look increasingly brighter for Tesla Energy — even if the numbers right now are a bit lackluster.
With the acquisition of SolarCity and Gigafactory 2, Tesla offers a full suite of energy products that incorporates solar, storage, and grid services. As the world’s only fully integrated sustainable energy company, it is encouraging businesses and people to think electric car + solar panels + battery storage as an integrated whole.
What yesterday’s investor and media announcements indicated, however, is that Tesla Energy is in transition. There is tremendous demand, but relatively low Tesla solar volumes are expected in 2018. In total, cash flow from solar is anticipated to remain neutral and relatively stable for the remainder of 2018, the company said.
In May 2018, Tesla reached the goal of deploying 1 GWh of energy storage worldwide after fewer than 5 years. Near-term goals are to add another 1 GWh of energy storage within 9 to 12 months.
Demand for Tesla’s energy storage products can’t keep up with production even as the company continually adds capacity. That means growing energy business revenue in the remainder of 2018, but more around the corner.
In response to a question from CleanTechnica Director Zachary Shahan, Tesla CEO Elon Musk stated, “we’re kind of cell starved for Powerwall right now, so we actually had to artificially limit the number of Powerwalls because we don’t have enough cells. So we’re solving for that very rapidly and we expect to ramp up Powerwall and Powerpack production substantially later this year and early next — as well as ramping up retrofit solar and then the Solar Roof.”
Tesla Energy: Highlights of the Tesla Investor Letter and Conference Call
According to third-party research, grid maintenance costs declined by 90% since deployment of the 129 MWh Powerpack project in South Australia. The battery’s response to electricity demand has been reliable, leading to substantial interest in energy storage products from residential as well as commercial customers.
In Q2, energy storage deployments grew to 203 MWh, an increase of 106% from Q2 2017. During the first half of 2018, energy storage deployments were 450% higher compared to the same period last year, with an accompanying goal to triple energy storage deployments in 2018 compared to last year.
Tesla Energy deployed 84 MW of solar energy generation systems in Q2, an 11% increase over Q1 2018. Cash and loan system sales made up 68% of Tesla Energy residential deployments in the quarter, up from 37% in Q2 2017.
Cross-Selling Potential of Tesla Vehicles & Energy Products
The Tesla solar sales strategy went through a significant change in Q2 in preparation to sell energy products exclusively at Tesla retail locations and online. The company cut 9% of its workforce in June 2018 to downsize the residential solar business it bought 2 years ago.
Substantial cross-selling between the catalog of vehicles and energy products in 80+ Tesla stores in the US will expand outside of the US in Q3. However, the Tesla website states that the earliest the company is scheduling Powerwall installations for new orders is late 2018.
Growth expectations for retrofit solar sales are high within the company thanks in part to an expanding customer base of Tesla vehicle owners. Updates to the Tesla app in Q2 intended to show the benefits of the company’s solar + storage solution to Tesla vehicle owners after a single swipe on the phone.
The Buffalo Gigafactory & Expected Capital Infusion
Upon acquiring SolarCity, Tesla changed the company’s direction towards direct sales instead of leases, with a focus on profitability. It also moved sales from door-to-door operations into Tesla stores. Tesla is also slowly rolling out its Solar Roof option, which uses solar tiles instead of large solar panels.
“We now have several hundred solar roofs now,” Musk told CleanTechnica Director Zachary Shahan during the conference call. “It takes a while to just confirm that the Solar Roof is going to last for 30 years and all the details work out, and we’re working with first responders to make sure it’s safe in the event of a fire and that kind of thing. So it’s quite a long validation program for a roof, which has got to last for 30, 40, 50 years, but we also expect to ramp that up next year at our Gigafactory 2 in Buffalo. That’s going to be super exciting. If there’s a company with a better product roadmap, I’d like to know where it is, because we’ve got some super awesome stuff coming.”
Tesla energy is ramping solar roof production in Buffalo while continuing to develop the product design and production process through iterations that emerge from the real world — from learning experiences in early factory production as well as field installations. Tesla plans to ramp production more toward the end of 2018, with important emphasis on simplifying the production and installation process before deploying significant capital into factory automation.
Overall, the Q1 2018 U.S. Solar Market Insight report from the Solar Energy Industries Association (SEIA), outlines that the US installed 2.5 GW of solar PV capacity in Q1 2018, reaching 55.9 GW of total installed capacity. That 55.9 GW total is enough to power 10.7 million US homes. The 2.5 GW figure for the quarter represents a 13% increase year over year. Total installed US PV capacity is expected to more than double over the next 5 years. By 2023, over 14 GW of PV capacity is expected to be installed annually. Tesla should have a solid chunk of that if all continues to go as planned.
Edit: Per Tesla, Elon mentioned “several hundred homes with solar roof” on the Q2 2018 earnings call. To clarify, this includes homes that are in some stage of the installation process or being actively scheduled for install, not just homes where installation is complete.