Sept 2019, Clean Technica excerpt
Many will focus on how this makes it so easy to buy commercial sizes of solar. They are banking on you trusting the Tesla brand name to give you good pricing, quality, and reliability — enough so that you will just fill out the 12 fields and put the $100 on your corporate credit card. If this works, it will slash the marketing and sales costs of commercial solar, and that could help cut the costs of solar acquisition.
Originally, the price of solar was high because the panels and inverters were high. That was true from the 1970s until recently. The worldwide volume of solar has gone up so much in recent years, and thanks to Swanson’s Law (which isn’t a real scientific law, but more of a guideline, which states that every time the volume installed doubles, the cost per watt of PV modules goes down 20%), we now have cost-competitive rooftop solar power. The costs of the hardware and labor have come down greatly (labor goes down as the panels get more efficient, as you don’t have to mount as many panels to get a given amount of kWh).
The two things that haven’t gone down much are permitting costs and acquisition costs (sales and marketing). The topic of too much government regulation and how it is hurting our transition to solar is the subject for another article, but it is an excellent way for Republicans to show that their brand of less government can help solve the problem of climate change by reducing the costs of solar and letting market forces do the work of encouraging millions of people to install solar to save money on their electric bills. But this announcement is about how Tesla is trying by itself to simplify the long and drawn out process that is common in buying commercial solar.
Image from www.tesla.com/energy/design/commercial
Instead of starting the process with a site survey or a roof inspection, Tesla just publishes this sizing guide and assumes the commercial customer knows the size of his or her roof. It isn’t about maximizing solar production, it is about simplifying the buying process. It’s easy to see the price per watt going down from $2.22 ($1.55 after the 30% federal tax credit) to $1.44 ($1.01 after tax credit).
Getting within a penny of the psychologically magical $1 for a watt of solar generation capacity that has been talked about as a goal for years or decades is game changing. Any commercial customer assumed they would only be able to get to the average price of $1.83 a watt after months of hard negotiations pitting several vendors against each other and playing a high-stakes game of chicken to get the best pricing. What if you could get better pricing in 5 minutes without all the games? Does that sound appealing to you?
3 Ways To Buy
Images from www.tesla.com/energy/design/commercial
There are 3 simple ways to buy the solar.
- To get the greatest savings, you want to pay cash for the system if you have it available.
- If cash is tight at your business (as it frequently is), you can subscribe to solar from day one and not impact your balance sheet with debt as you would if you took out a loan for a system. You also don’t have to report on your financial statements that you signed a long-term lease, because you didn’t. You can end it at any time for a nominal fee (either Tesla or a qualified third party can uninstall the panels).
- If you don’t even want the risk for cloudy days, customers of selected utilities can just pay for the power they generate. This is the lowest risk option, since you are guaranteed to make money on every kWh. You make money on every watt generated because your cost per kWh is less than the utility pays you for it. Doing some back of the envelope calculations, it doesn’t look like Tesla is charging you too much for taking the risk of cloudy days or your panels degrading over time. This will be the best option for risk averse decision makers.
Tesla really likes to shake up markets. This game changing announcement has so many innovations announced in one little tweet:
- Standard transparent pricing.
- Standard sizing.
- Groundbreaking low prices for commercial systems only seen before at utility scale.
- Simple monthly subscription option.
- Lower-risk option to just subscribe by kWh of power generated and not pay monthly.
- No commitment on subscription options.
- Tesla’s famous 5 minute ordering process.
As Tesla rolls this out to other states and countries, I’m sure the details will change. Many will see the simplification of the ordering process but miss the other innovations that Tesla has also announced.