Earlier this decade, the rise of third-party solar upended the residential solar market. Leases and power purchase agreements allowed companies like Sunrun, SolarCity, Vivint and Sungevity to provide rooftop solar to the masses in a way that eliminated the big up-front costs and credit checks associated with buying a $30,000 attachment to your home, and rapidly became the dominant business model.
But as loans got more sophisticated and Tesla moved SolarCity away from its path of aggressive sales and growth, the third-party solar market contracted. Currently the space has several successful companies, but the majority of residential solar is sold through loans and direct purchases, and market leaders Sunrun and Vivint are plagued by ballooning customer acquisition costs.
As usual, Tesla is charting its own path. In a series of tweets on Sunday morning, Elon Musk revealed a new strategy: renting solar. The company is offering to rent homeowners a small, medium or large PV system, at $50-$195 per month, for systems 3.8 – 11.4 kW in capacity.
On Twitter, Musk was characteristically bullish about the ability of the offering to save customers money, estimating that this will save customers around $500 annually.
With the new lower Tesla pricing, it’s like having a money printer on your roof if you live a state with high electricity costs. Still better to buy, but the rental option makes the economics obvious.
— Elon Musk (@elonmusk) August 18, 2019
The rental option eliminates any long-term contract, but there is a charge of $1,500 to remove the system at the end of the rental period. Which may explain why other companies have not yet tried this option: A PV system is a semi-permanent attachment, and not exactly easy to remove once installed.
Solar rentals are currently only available in the service areas of 20 utilities in six states (see graphic on the right), and the Powerwall battery is not available in the rental deal.
The launch of the solar rental option comes directly on the heels of Tesla’s move to sales of solar through its website, and like the rental option the internet purchase option shows substantial savings through eliminating sales and many kinds of transaction costs. And while Tesla provides a calculator to show customer savings, it remains to be seen if the cost savings and ease of transaction alone will allow these options to turn around Tesla’s contracting share of the rooftop solar market.
In the second quarter of 2019 Tesla installed only 29 MW of solar, representing a fraction of the market share when SolarCity was responsible for around one third of the U.S. residential solar market on its own.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: email@example.com.
It is an interesting concept: “As usual, Tesla is charting its own path. In a series of tweets on Sunday morning, Elon Musk revealed a new strategy: renting solar. The company is offering to rent homeowners a small, medium or large PV system, at $50-$195 per month, for systems 3.8 – 11.4 kW in capacity.”
The rental of a cookie cutter solar PV system may work well for many folks. Right now, with the banks giving lousy interest rates of 0.5% APY, one is better off putting their money on their roof in solar PV than leaving it in a bank with an insulting interest return. Right now and for at least three years more, the ITC allows reducing your Federal taxes by 30% this year, 26% next year and 22% the year after next. Tesla may be premature in this offering. The Rent Appliance Centers, RAC and even Best Buy have a model kind of like what TESLA proposes. The bottom line is that the ‘appliance’ will cost twice as much as it would cash.
I would love to see a financial modeling of this if anyone has done one. I feel like this is just like a system lease except standardized with size options.
Thanks Christian. Is the solar lease available outside the six states listed? Can Tesla provide this service in any state?
Tesla is only doing the rentals in six states. I do not know about the pre-existing lease option; Tesla certainly operates in more than six states, so I would suspect there are many more places where you can get one.
With the latest, breaking news of Walmart’s law suit for failing systems, TESLA may get stuck with the bad press. Install TESLA’s Rental solar PV and get a flat blue match to put on your roof. One wonders if we will ever really know what all of the failures these systems have had were actually caused by. From past events, most of the time, the system problem was some kind of extreme equipment fail, an inverter bursting into flames. This is the reason I like to put in larger inverters than needed to support the solar PV array than to under size the inverter(s) to cap the power being generated from the array. The less temperature and electrical stress one puts on the inverter(s), the longer they will last in service.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.