In short: On August 18th, 2019, Elon Musk announced the relaunch of Tesla Solar via Twitter. The “new” sales model offers homeowners the opportunity to install Tesla solar panels in three standard system sizes, with pricing based on their home state.
Tesla will now rent solar panels in certain areas of 6 states, with monthly rental agreements priced as low as $50/month, with annual savings estimated to be between $20 and $650, depending on your state. But there are some issues with certain parts of Tesla’s contract that might make some folks want to steer clear of this offering.
It’s August 2019 and Tesla just announced a new paradigm for home solar that promises (figuratively, not contractually) to save homeowners money from day one. It began, as do so many things these days, on Twitter:
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
Well, perhaps it actually began back in April, 2019, the last time Tesla re-launched its solar division. Back in the halcyon days of (checks watch) three months ago, Tesla began offering solar panels in standard 4-kilowatt chunks it called “systems.” Depending on how much solar you need for your home, you could stack up to four “systems” to create a 4- 8- 12- or 16-kilowatt solar installation.
Under the newly announced “re-launch,” Tesla now offers systems in 3 sizes: Small (3.8-kW), Medium (7.6-kW), and Large (11.4-kW). All sizes include Panasonic’s 315-watt HIT panels along with Tesla hardware that provides a sleek black-on-black look on the roof:
Tesla solar panels are available for purchase in most states, all for about $2.85 per watt, installed. Considering the average cost of solar panels in 2019 is above $3 per watt, that’s pretty good! Unfortunately the price per watt doesn’t get any cheaper if you choose large vs. small, suggesting Tesla is operating with very thin margins here.
But the most important news about this re-launch was a surprise for homeowners and the solar industry. Tesla will now rent solar panels to homeowners in 6 states: Arizona, California, Connecticut, Massachusetts, New Jersey, and New Mexico. That surprise is the focus of the rest of this article.
What are the terms of renting Tesla solar panels?
If you live in one of the states Tesla where currently rents panels, you can choose a Small, Medium, or Large system for between $50-$150 per month ($65-$195 in California). Tesla will take a fully-refundable $100 deposit to begin the process of assessing your roof and preparing your solar design. If you end up getting a system installed, the deposit is applied to your rent payments.
Along with the system and hardware components, you get Tesla’s monitoring and ongoing maintenance, should the need arise. It is important to note that under this agreement, Tesla owns the system and rents it to you. Because of that, Tesla is able to take advantage of any state or federal incentives available to system owners, including tax credits, rebates, and SRECs.
The rental agreement is made on a month-to-month basis, meaning you can cancel whenever you like. If you choose to cancel, Tesla will charge you $1,500 to remove the panels and seal the penetrations it made in your roof. From a financial standpoint, it’s best to not cancel at all as long as you’re saving money, because incurring that $1,500 cost can quickly wipe out any savings you’ve seen up to that point.
Tesla guarantees the system will be free of defects in workmanship and materials for as long as you’re under contract. Additionally, they guarantee all roof penetrations made to install the system will be watertight for at least 10 years. After 5 years of payments, Tesla offers renters the ability to purchase the system, for whatever price they come up with then.
How much can you save with rented Tesla panels?
If you take Tesla’s word for it, renting a system from them can save you from $20 to $650 per year, depending on your state and your roof. Here’s a table showing Tesla’s savings estimates for the 6 states where they’re now renting panels:
And that’s just for the Small system. Because the per-watt pricing for the Medium and Large sizes is identical, simply multiply those savings estimates by 2 or 3 to see what they might be if you choose a larger size.
We assume the ranges in that table are based on differences in roof orientation and angle, among other things. The low numbers may not be very compelling, for example: $20 annual savings in New Jersey? Yeesh. But the higher estimate look pretty good. Wanna save $650 on energy this year with no hassle? Sign on the dotted line!
Should you take Tesla’s word for it?
Actually, maybe you should.
Solar Power Rocks ran the numbers through our calculation engine. We found that Tesla is actually underestimating the amount of energy these panels would produce, compared to what we’d expect to see on a good south-facing roof in those states. We use the National Renewable Energy Laboratory’s PVWatts solar calculator and some pretty conservative estimates of energy losses, so we can be pretty confident in saying Tesla’s rental customers could be pleasantly surprised by their systems’ performance.
Confusing things in (and missing from) the solar rental contract
Tesla’s solar rental contract (PDF) includes some things that worry us, and omits some things that should be included.
First, The contract includes a provision that allows Tesla to increase the monthly cost whenever they want to.
Again, you can cancel any time for $1,500, but would you though? Tesla is giving itself impunity to raise your prices and your only recourse is to incur a huge fee. Do you trust them?
Next is the section on cancellation. If you cancel, be ready for Tesla to show up at any time they want to get their property back. Oh and that 10-year warranty on roof penetrations? When you’re no longer a customer, they’ll only guarantee water-tightness for a single year.
And then there are the things they left out of that contract. Unlike many solar PPA contracts, there is no production guarantee here. That means Tesla can claim your system is “working” even though it isn’t meeting their low-end production numbers. Can this be true? We’re looking for more information from Tesla here, and we’ll hopefully get some clarity soon.
Finally, there is no provision that eliminates the $1,500 removal fee after a certain number of years. Eventually, you’re going to pay it. It would be nice to see Tesla add a clause that protects renters in the event that new technology comes along a certain number of years after initial installation. Some way to let people upgrade to the newest solar technology if they’ve been loyal customers for many years.
So is renting Tesla solar panels worth it?
The not-so-secret secret here is that by renting these solar panels, you’re agreeing to let Tesla keep all the state and federal incentives available for installing solar. In many cases, these incentives are worth tens of thousands of dollars per system, and solar rental customers will see none of it.
But that’s okay for some folks, because many solar incentives tend to be income tax credits, and you can’t take those if you don’t currently have enough income to tax. The strange thing is two of the places where Tesla is now renting panels have excellent incentives not based on the income of the system owners. Performance payment programs in Massachusetts and New Jersey save solar owners thousands of dollars per kilowatt of installed solar over the lives of their systems.
In those states, Tesla will now reap all the benefits on its rented systems and claim they’re helping you save a couple hundred bucks a year. Buying solar with a loan or cash is almost always the better choice. You can eliminate the potential hassles of unclear contract language and keep all the incentives for yourself.
So… renting Tesla panels might be worth it for you IF:
- you can’t take tax credits because you have no income
- you don’t have cash and won’t take a loan
- you’re okay with the price changing
- you don’t mind eventually paying $1,500 to get rid of the panels
- you really just like Tesla and want to have their stuff on your house
Then yeah, sure. Renting Tesla panels can work for you. Just hope they don’t catch fire.
Last modified: August 21, 2019