A recent post on solar-power-now.com mentioned that Tesla has yet to aggressively re-enter the residential solar power market after acquiring SolarCity.
Well, the company just announced a new angle to their solar power business. They are now offering homeowners the ability to rent solar panel systems for as little as $50 per month. Homeowners must pay a fully refundable $100 fee upfront and also sign a contract that says that they must pay $1,500 if they change their minds and want the solar panels removed. Currently the program is only available in California, Arizona, Connecticut, Massachusetts, New Jersey, and New Mexico.
In many ways, this new approach to entering the solar business is very similar to SolarCity’s leasing strategy. Basically, it entailed the company entering higher-priced electricity markets and offering slightly cheaper prices than what the local utilities were charging for power. They would pitch it as a win-win; we install the system for free and you see savings right away.
However, the best value in solar is still in buying a solar power system.
Elon Musk has admitted this in a recent tweet – “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.”
Basically, purchasing (whether with cash or getting a loan) a solar panel system would save you considerably more money over the long term than renting.
Here’s an example of what the company offers for their program in Arizona.
- System size – 3.8kw (smallest of the three they offer)
- Monthly rental – $50
- Value of Annual System Generation – $700-$900
- Net Savings – $110-$280
A good deal, right? Sure, savings are more than $100 per year and homeowners do not have to do much or make any real commitments. Instead, many thousands of dollars can be saved over the long term when a solar power system is purchased.
The difference between renting solar and buying is very similar to renting or owning a home. When homeowners buy solar they will have acquired an asset that they will eventually have paid off, much like a mortgage. Solar, however, can be paid off in just a few years.
It’s very apparent that Tesla and other large solar companies are struggling to find ways to convince people to go solar.
There’s still a disconnect here.
Yes, it’s a marketing problem, but it is primarily an educational one. If homeowners were educated on all of the benefits of going solar, primarily the massive financially related ones, more people would. On the other hand, this new tactic might simply be a way for Tesla to start the conversation, make it easy to rent solar, and eventually turn those renters into purchasers once they see the value.
The big picture viewpoint remains the same. Large solar companies like Tesla still need to find ways of lowering their customer acquisition costs. They simply cannot compete with smaller and local solar panel installation companies on both price and service. In all fairness, Tesla did mention a reduction in the cost of their solar panel systems earlier this year. They are now similarly priced with the other major solar panel installers.
As more homeowners continue to get solar installed on their homes, they will have more conversations regarding their experiences. Word of mouth will surely spread about how much cheaper their local solar company is compared to the big solar outfits.
Kudos to Tesla for bringing more attention to their solar offerings. Hopefully the company will be able to expand their customer base while eventually lowering prices as well.
