As the dust settles, the details of Elon Musk’s new solar-plus-storage offering remain unclear
For a while now, Tesla has situated itself as the Apple of the electric storage and transport industries. It streamlines the design of an existing technology, makes it sleeker and sexier, while expertly marketing it to cultivate an upscale, but mass-market following.
The company first did it with its electric vehicles, producing sought-after luxury cars and then gradually moving toward less expensive models. And it brought residential energy storage into the consumer mainstream last year when it unveiled the Powerpack, the first generation of its home battery.
Now Tesla is leveraging its planned acquisition of solar installer SolarCity to do the same thing with residential solar and storage. Last Friday, CEO Elon Musk unveiled a slate of integrated solar roof and battery storage offerings that mimic the design of traditional roof shingles and eliminate the external mounted panel design.
The glass PV tiles, available in a number of common roof colors, will cost “less than a normal roof plus the cost of electricity,” Musk promised, and will integrate with the Powerwall 2, the second generation of Tesla’s home storage system.
That new battery is powerful enough to run the refrigerator, sockets and lights of a four-bedroom house for a day — or indefinitely when combined with the solar system, Musk said, touting a future where everyday consumers have a solar roof, battery and electric vehicle.
But like Tesla events of the past, those general operational and cost promises are about as much detail over the specifics of the battery and the solar system as Musk divulged all night. Details about the panel efficiency, battery life and overall cost were left out of Musk’s presentation, leaving a number of open questions about the sleek new Tesla offering and its potential impacts on the market.
1. Solar roof specifications
Just as Tesla was not the first to offer electric vehicles or home batteries, it is not the first in the integrated solar panel market.
While not widespread for the residential market yet, a number of large buildings have demonstrated the effectiveness of solar technologies integrated into their designs, including the National Air and Space Museum. And Greentech points out there are a number of integrated solar roof installers on the market already, though no runaway commercial successes.
Integrated PV technologies are appealing for their sleek design, but are more expensive than existing rooftop solar models that are simply bolted to a homeowner’s roof. Typically, integrated PV does not generate power with the efficiency of traditional panels, which can more easily be faced toward direct sunlight.
Beyond his promise that the Tesla roofs would cost less than traditional ones over time, Musk offered no pricing or efficiency details on the new solar roofs, as well as no insight as to how power contracts with consumers would be structured. Currently, SolarCity contracts typically guarantee solar output for 20 years, but most roofs are expected to last longer.
Other financial aspects of owning the PV roof, such as its impacts on a mortgage, resale value, homeowner’s insurance and other aspects of property value remain unclear, though those are issues that continue to bedevil the residential solar sector at large.
It also remains to be seen how the glass panels perform in the field. Typical solar panels require regular cleaning to achieve maximum output, and it's unclear whether homeowners would have to regularly wipe down their PV rooftops to generate energy.
2. Battery specifications
A bit more is known about the solar roof’s partner — the Powerpack 2.
At the event, Musk said the new 7 kW, 14 kWh battery will cost $5,500, including a custom inverter. That capacity outpaces both the first iteration of the Powerpack and a larger, 10 kWh model Tesla discontinued last year.
That size battery is likely better suited to the average American homeowner, GTM reports, but little is known beyond its size and price. Tesla did not release details about the expected efficiency or cycle life of the Powerwall 2, or the second iteration of its Powerpack grid-scale battery, released Thursday evening.
Cycle life, or the number of cycles a battery can perform before degrading to a certain level, is expected to be crucial for customers of both the residential and grid-scale batteries. Using a home battery to store and discharge solar from a PV roof typically uses at least one cycle a day, as do grid services such as ramping or shifting renewables generation.
The rate at which batteries degrade determines how long they can be used before needing replacement, and often forms the foundation of energy storage contracts with utilities. But Tesla has never publicly released degradation curves or other performance information regarding their energy storage systems or car batteries, which some companies consider proprietary information.
Tesla currently offers an eight-year “unlimited mile” warranty for its Model S electric vehicle batteries, but makes no commitment to replace the $44,000 car battery after that time.
A survey of Tesla owners by EV advocate Plug In America last year showed that the Model S generally loses about 5% of its capacity within the first 50,000 miles of driving, but the jury is still out on how the batteries will perform once they reach the end of the warranty period.
3. Solar and storage markets
But even if the integrated PV and storage market is not large yet, Tesla is not without competition.
There are a number of companies installing integrated solar roofing projects, Greentech notes, including names like SunTegra and Solarmass. There’s also a sizeable list of high-profile failures, like SunEdison’s Ready Solar and PV shingle offerings from Dow Chemical and PV.
As impressive as the design of integrated solar shingles is, Greentech’s Eric Wesoff points out that hasn’t been the biggest issue in commercializing it with other companies. Instead, it is launching a pricey, newfangled environmental technology through a conservative roofing industry.
“PV panels and roofing have very different roles, and I've observed that combining the two compromises both at a premium cost,” the editor wrote in an open letter to Musk.
If Tesla can succeed in convincing consumers and the broader industry that its roofs are indeed cheaper and more durable than traditional designs, its brand recognition and reputation could help it make inroads. But it remains to be seen how the company will go about sharing the technology behind its new combined offering.
Currently, Tesla makes many of its electric vehicle patents public, but other aspects of its business are strictly vertically integrated. The company does not sell its cars through third party dealerships and even uses a different charger outlet than other EVs.
With the planned merger with SolarCity, Tesla appears to be spreading that vertically integrated model to its energy offerings, creating an all-in-one distributed energy company. If it continues that trajectory, that could see it stop selling batteries to third-party installers like Sunrun, which currently uses Tesla batteries for its residential solar offering and would be a direct competitor with a merged Tesla.
4. The SolarCity merger
Musk’s event on Friday was about more than unveiling a new product — it was also a chance to show Tesla investors the promise of a merger with SolarCity, the largest residential rooftop installer in the U.S.
Since Tesla announced its intent to buy the company in June, some analysts and shareholders have reacted skeptically. Musk is SolarCity’s chair, his cousins run the company, and many saw the move as a bailout for the residential installer, whose business model relies on hefty debt financing to support its model of no-upfront-cost solar leases.
Tesla’s unexpected third quarter profit, reported last week, gave pause to some of the most anxious shareholders, and Musk’s unveiling of an exciting, integrated product could buoy support for the acquisition.
If that goes badly for Musk, the future of the new solar roof option appears in doubt. In a “master plan” for Tesla unveiled in the summer, Musk hinted at a new integrated solar offering and warned that it would be impossible to offer it if SolarCity remained a separate company.
Whether shareholders view the solar roof offering as an exciting new extension of Tesla’s business or a risky bet on an unfamiliar market remains to be seen. They vote on the merger Nov. 17.
5. Utility sector impact
Musk often frames his business moves as part of a larger strategy to clean up the electricity and transport sectors, allowing them to run on renewable energy and modern energy storage.
That broad vision is one shared by a number of policymakers, including U.S. leaders who signed the Paris Climate Accord last year. But just how deep that decarbonization of the power sector affects utilities remains to be seen.
Fossil generators are sure to feel the impacts, and many are already dealing with widespread coal plant retirements. But Musk said that the future for electric utilities in this cleaner future remains bright.
Powering new electric vehicles will increase demand for electricity, making utilities more critical to the modern energy system and assuaging concerns of a financial “death spiral” for the sector. Going forward, Musk predicted the grid will eventually reach an equilibrium with about one-third of power coming from distributed energy and two-thirds from utilities.
“I think it’s a very bright future for utilities and rooftop [solar],” he said.
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