With discussions about climate change and climate legislation at the forefront of many minds across the United States, Tesla has announced plans to cut the price of its solar panels to 16% below market average.
The price drop marks Tesla’s first effort to raise solar sales after the company reported over $700 million in total losses in the first quarter of 2019 and saw its stock price fall to one of its lowest points in the last calendar year. Momentum, however, is on the company’s side with the news that Tesla’s Model 3 electric sedan was the No. 1 best-selling car in the luxury market for the first quarter of 2019 by a wide margin.
“The trend that you are starting to see is there’s a mega trend toward electrification,” said Vikram Aggarwal, CEO of EnergySage, a website that lets users compare prices on solar panel installation. “Electrification of our energy consumption and electrification when it comes to our mobility. Tesla sold more cars in Q4 than BMW, Mercedes, Audi, and a bunch of other premium cars combined. Electric cars are definitely going to be the future of our mobility. More and more of the energy consumption is now going to be electricity.”
Approximately 2 million consumers have already purchased solar panels, says Aggarwal, whose site features a “solar calculator” that shows consumers quotes on panel installation based on their property type and location. That number is set to grow as the price of solar power declines. In 2010, the average price was over $7 per watt but has since fallen to below $3 per watt, and even lower after federal tax incentives. Consumers also save money from lower energy bills and, in some cases, from selling excess electricity back to the grid.
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“The economics are working very, very well. Solar is becoming very affordable and accessible to mass market homeowners and businesses,” Aggarwal said. “Not only does it allow consumers to reduce or even eliminate electricity costs, or near eliminate, but it also allows you to lock in your energy costs for the long-term. So people really like that idea and that would be the primary driver, I would say.”
With price no longer a major barrier, there remains the problem of energy storage. Unlike the grid, which runs 24 hours a day, the sun is unavailable at night and during adverse weather. Batteries to store energy for literal rainy days have been one of the industry’s most difficult challenges.
“The one problem that really remains a big deal for all green energy is the battery,” said Veronique de Rugy, senior research fellow at the Mercatus Center. “It’s a struggle to find a way to save enough energy in a space that’s not gigantic.”
Tesla’s home battery, the Powerwall, costs over $7,000 per unit, and the total price of two panel systems and two Powerwalls comes to roughly $35,000 before federal tax incentives, the same as a Model 3. But Aggarwal says people are willing to make a vehicle-sized purchase if it means powering their home with little assistance from the grid and doing their part to cut emissions.
“We are seeing a lot of people are very attracted to climate implications,” Aggarwal explained. “People want to live more sustainably, they want to do the right thing, and they realize that climate change is real, it’s here. Solar and wind are now the cheapest form of generating electricity, much cheaper than gas, coal, or even nuclear. In the next few years, solar and wind, especially solar, will be unbeatable from a cost perspective.”
Increasing efficiency of panels and batteries will make solar panels attractive to consumers in different areas of the country, including those not known for liberal amounts of sunshine. Tesla heralds its Powerwall as key for people living in areas where storms are frequent, saying that, in the event of an outage, a charged Powerwall can sustain a home’s electricity for seven days.
“Panel manufacturers realize that this is a national phenomenon,” Aggarwal said. “If you look at Germany, they actually get less sun [than anywhere in the U.S.], except for the most northern tip of Maine. So most of the United States gets significantly more sun than Germany, but now 30% of all of Germany’s power is generated by solar. That should give everyone the sense of how universally applicable solar energy is.”
