Tesla Plans To Boost Solar Business By Slashing Costs
The average cost of a residential rooftop solar system today is about $2.85 per watt, according to the Solar Energy Industries Association. Of that, $1.00 goes to so-called soft costs, things like design, sales commissions, permitting, and inspections. Sanjay Shah, the head of Tesla’s solar business, tells the New York Times, “We spend hours and hours and days and days on the process. It adds cost. It adds time. We needed to have a very streamlined process.”
Shah says Tesla expects to slash costs by streamlining the process, a move he says will get the price down to between $1.75 and $1.99 per watt. The Tesla rooftop systems will be sold in increments of 12 panels each — enough to provide about 4 kilowatts of power.
In addition, all sales will be done online and customers will now do some of the tasks the company used to do. They will photograph electric meters, circuit breaker boxes, and other equipment, then send the images to the company, reducing the number of site visits required.
“It’s not sexy to talk about, but soft costs are kind of the biggest barrier to getting the next level of costs down,” Bernadette Del Chiaro, director of the California Solar and Storage Association, tells The Times. “If they’ve come up with some new ways to lower soft costs, that would be a game changer.”
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Allison Mond, a senior analyst at Wood Mackenzie, adds that many solar companies are automating tasks and using online digital images to assess customers’ roofs, but Tesla’s new approach has the potential to reduce labor costs substantially more than what those other companies have achieved.
Shah says less than 3% of US homeowners have rooftop solar systems, but he expects more will opt for them once word about how much money they save customers in the long run gets around. “It’s practically a money printing machine on their roofs,” he says.
Notice that none of the above pertains to Tesla’s Solar Roof product, which is still awaiting large-scale production almost 2 years after Elon Musk introduced it during a splashy reveal event. Shah says production should get going in earnest later this year, but the company has been saying that kind of thing for so long that many are starting to tune out. If Tesla doesn’t get started soon, it may miss employment targets it promised the state of New York, which financed the Gigafactory 2 in Buffalo in the hopes of bringing jobs to an area that has suffered from chronic unemployment for years.
Still, the company’s new plan for marketing its conventional solar panels is promising, assuming it follows through. The purchase of SolarCity is looking more and more as nothing more than a straight bailout of Musk’s cousins who founded the company almost a decade ago. Since then, it has been just another planet in Musk’s solar system. Will rooftop solar finally have a breakout moment for Tesla? “We’ll see,” said the Zen master.
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