Tesla Solar Roof: ‘Deal or Dud’?

Guest post by David Middleton

heres-the-real-price-for-a-tesla-solar-roof

Here’s How Much One of Tesla’s Amazing Solar Roofs Actually Costs

Tesla’s price promises savings, but they won’t come immediately.

By Jack Crosbie on August 5, 2017
Filed Under Batteries, Electric Cars, Elon Musk, Money, Power & Solar Energy

The Tesla Solar Roof is here, and if company CEO Elon Musk has his way, there will be one on most houses within 15 years. But despite its energy efficiency and dazzling looks, clean power doesn’t come cheap — and Tesla’s listed price is a little hazy on some of the details. So how much will it actually cost?

Tesla offers one figure for the cost of its proprietary solar roof: $21.85 per square foot, on average. Musk has said the tiles will cost “less than a normal roof.” The problem is Tesla’s messaging and advertising for the roof all factor into 30 years of energy savings from going solar. That makes sense, given three decades is the typical lifetime for a roof, but those aren’t savings a buyer will see on day one, or even day 1,000. And the initial cost is steep.

[…]

What’s a Tesla Solar Roof Actually Going to Cost?

Here’s where it gets tricky. Tesla has a cost calculator on its website which looks at a home’s location, size, and power demands and offers a quote for how much it’s going to cost. The big factor, it seems, is how much of your roof needs to be solar. Something that isn’t readily apparent about Tesla’s roof tiles is that they’re not all solar. In fact, the company estimates that the average house will only need, or be able to accommodate, about 40 percent of the solar tiles — the rest will be identical looking but non-solar glass shingles. A non-solar tile costs $11 per square foot, but the solar-paneled ones are $42 per square foot.

I decided to try it for the same house: foothills of California, 1,800 square foot roof, 40 percent solar tiles.

Hold up, my solar roof is going to pay me money? That right there is the big sell. The final number on Tesla’s site is how much money a solar roof is going to make you over 30 years, which is the standard warranty for an asphalt shingle roof. Tesla’s warranty is “infinite,” Musk says. The numbers that aren’t so apparent, however, are the actual costs.

The calculations above show me that, including installation and materials and everything, the solar roof is going to cost me $52,100. Add in a Powerwall battery, which is necessary for the roof setup to work, and that’s an extra $7,000 to $59,100 right out of pocket. Part of Tesla’s selling point is the generous tax credits — until 2019, homeowners can deduct a full 30 percent of their purchase and installation costs for solar energy from their taxes.

[…]

Inverse

Well, I entered my address into the Telsa solar roof calculator and never found a way to generate a positive return.  At 40% solar, it said I needed 4 Powerwall batteries (big house) and yielded a 30-yr net cost of $24,400, including a $42,800 tax credit.  The only way I got to break-even was to go 70% solar ($250k worth of solar roof & batteries).

However, Tesla’s solar roof calculator, does not factor in the “time value of money.”  Spending $250k now to get $250k back over 30 years is a really stupid thing to do.

What is ‘Net Present Value – NPV’

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a projected investment or project.

The following is the formula for calculating NPV:

Net Present Value (NPV)

where

Ct = net cash inflow during the period t

C= total initial investment costs

r = discount rate, and

t = number of time periods

A positive net present value indicates that the projected earnings generated by a project or investment (in present dollars) exceeds the anticipated costs (also in present dollars). Generally, an investment with a positive NPV will be a profitable one and one with a negative NPV will result in a net loss. This concept is the basis for the Net Present Value Rule, which dictates that the only investments that should be made are those with positive NPV values.

When the investment in question is an acquisition or a merger, one might also use the Discounted Cash Flow (DCF)metric.

Apart from the formula itself, net present value can often be calculated using tables, spreadsheets such as Microsoft Excel or Investopedia’s own NPV calculator.

[…]

Read more: Net Present Value (NPV)http://www.investopedia.com/terms/n/npv.asp#ixzz4pAZMi1OM
Follow us: Investopedia on Facebook

I calculated the NPV of the solar roof example in the Inverse article at a 2% discount rate:

 Gross W/Tax Credit
Ct = net cash inflow during the period t  $        85,700  $        85,700
Co = total initial investment costs  $        59,100  $        45,800
r = discount rate, and 2% 2%
t = number of time periods 30 30
NPV  $     (11,788)  $          1,512

Without corporate welfare (gross) the NPV is -$11,788!!! With corporate welfare (tax credit), the NPV of the $59,100 “investment” is barely positive.

Businesses generally use a 7% discount rate.

 Gross Subsidized
Ct = net cash inflow during the period t  $        85,700  $        85,700
Co = total initial investment costs  $        59,100  $        45,800
r = discount rate, and 7% 7%
t = number of time periods 30 30
NPV  $     (47,842)  $     (34,542)

Oil companies generally value the future revenue from proved oil reserves with a 10% discount rate (PV10).

 Gross Subsidized
Ct = net cash inflow during the period t  $        85,700  $        85,700
Co = total initial investment costs  $        59,100  $        45,800
r = discount rate, and 10% 10%
t = number of time periods 30 30
NPV  $     (54,189)  $     (40,889)

Unless you think that buying your electricity from Tesla 30 years in advance is a “deal”… The solar wall is a definitive dud.

Featured image source: KAKE ABC TV

Addendum: Google Earth Project Sunroof

Enter your address and get the solar power potential of your roof.

The calculator said that I could save $17,000 over 20 years.  Even with the tax credit, I would lose money on an 8 kW system… without applying a discount rate.

See how many solar arrays are in your community.

Of the 6,400 roofs in my zip code, there are 29 solar arrays.

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238 thoughts on “Tesla Solar Roof: ‘Deal or Dud’?

  1. Here in Texas we have a lot of problems with losing power due to downed lines, etcetera (the soil isn’t good for burying power lines in a lot of places since we used to be sea-bottom). One of the potentially nifty things about such a roof is that it could provide power regardless of lines up or lines down, while also being strong enough to repel the kind of softball-sized hail that punched a hole CLEAN THROUGH my roof three years ago.

    It’s not an easy sell given the math, but I don’t think you can qualify it as a scam — unless you count all corporate welfare a scam, in which case, basically our whole economy is a scam, in which case… well, there are a lot of places to pre-digest stuff based on political economy, but WUWT doesn’t seem the place for that.

    • Apparently in Texas, you only lose power while the sun is shining, If you want reliabiity , buy a cheap couple hundred dollar gas powered generator that can work anytime, anyplace. Claiming a solar roof can provide reliable power may be the dopiest thing I’ve heard today.

      • Gulf Coast Texan here – yeah, a whole house generator is going to be cheaper and more reliable than this Tesla roof when a hurricane rolls through. (Not to mention what happens to this roof when hit with storm debris at 80 – 100 MPH.)

      • Oh, for God’s sake, you store power in your Tesla batteries……many, many people are doing this already. Get your head out of the sand and learn something.

      • arthur4563 August 8, 2017 at 8:51 am

        Apparently in Texas, you only lose power while the sun is shining, If you want reliabiity , buy a cheap couple hundred dollar gas powered generator that can work anytime, anyplace. Claiming a solar roof can provide reliable power may be the dopiest thing I’ve heard today.

        Mayme August 8, 2017 at 1:20 pm

        Oh, for God’s sake, you store power in your Tesla batteries……many, many people are doing this already. Get your head out of the sand and learn something.

        A Tesla Powerwall battery including mounting costs $6200, and stores 14 KWh of juice.

        Last month, my small house used about 11 KWh per day … so your battery would get me through a power outage as long as it didn’t last more than one day.

        On the other hand, I can buy a two-KW generator for about $500. It will generate about 6KWh per gallon of gasoline. Figuring $3 per gallon, I can get the amount of energy stored in a PowerWall (14 KWh) for about $7. However … the round-trip charge/discharge cycle is only 90% efficient, meaning that the true cost is only $6.30 …

        This means that to break even, I’d have to get about a thousand full discharge cycles out of the Powerwall. Bearing in mind that the Powerwall only has a ten-year warranty, what are the odds?

        Finally, we have to include the time value of money. The expense for the Powerwall is all up front … but I don’t have to buy gas until I need it. Figuring the 1000 discharge cycles, I’m pushing that expense way out into the future.

        In Summary:

        1) Around here, we get power outages that commonly last two days and sometimes two weeks. The Powerwall won’t cover either one.

        2) The Powerwall is far more expensive than a small generator plus gas.

        3) You have to come up with six grand up front to get into the Powerwall game, versus $500 for the generator, so the time value of money will kill you.

        4) The 10-year guarantee for the Powerwall will run out long before you’ve used it for 1000 power blackouts … we get two or three here per year, so that’s four hundred years or so.

        In short, as an acquaintance of mine once remarked, “Get your head out of the sand and learn something.” Like far too many people, you’ve fallen for Elon’s glib tongue and excellent salesmanship.

        Best regards,

        w.

      • Heck, I have a 5kw diesel that I got out of an old light trailer. 800 pounds, but it sips fuel compared to the hardware store screamers.

        I even have a little, 200 pound, 700 watt diesel for if things really go long and I just need enough for lights.

    • Even factoring in the installation subsidy and using the best case scenario, you only get a positive return if you assume the lowest discount rate (2%). Think of this as the inflation rate – do you think over 30 years there will only be 2% annual inflation? You could generate a better return by investing the $60k in government bonds or no-risk savings certificates – even more n a mutual fund, although there is a potential downside risk there.

      Anything that is showing you returns over 30 years (on a best case scenario) and does not adjust for inflation would qualify as a scam if it were to be sold through the stock exchange. The fact that it is being sold to consumers should not exempt if from this definition.

      • Using inflation rate ALONE as the discount rate is only appropriate if your next best alternative to buying a solar roof system is burying that money in your backyard for 30 years. (Inflation cost)

        Otherwise you have to ALSO factor in the forgone returns on the NEXT BEST alternative for those funds, with comparable financial risk, instead of an investment in Tesla’s home power scheme. (Opportunity cost)

    • Well, hold on there, pardner. I thought the same when Solar City came out to give me the sell. At first, I said It would be useful for snow or hurricane outages. He said “Ahhh… Nope” Have to be connected to the grid for any of it to work. Ok, I said. How about id I get the $3000 battery installed? “Still Nope. Still have to be connected to the grid” I said that was a waste, and why was this so different from a generator, which uses a transfer switch to disconnect from the grid. Apparently, that’s not how it works.

      • Yes, this feature is called “anti-islanding”. The inverter that converts the DC in the PV strings to AC gets its 60 Hz heartbeat from the grid. If it doesn’t detect that heartbeat, it shuts down. Game over. You can actually design a system to do what you want, but instead of one PowerWall, you’d need about 10 of them and an inverter that can figure out whether it needs to send juice to the grid, charge the batteries, or feed the house. Not trivial.

    • In Michigan where I live the skies are frequently cloudy. And I don’t have a south facing surface on my roof. Getting those batteries charged would be a problem, especially in the winter. So on those really cold days in the winter when the temp gets down to zero F and the power fails the furnace shuts down and the house starts cooling off fast. The solar system would not do much good. Fortunately I have a gasoline powered portable generator and a transfer switch so I can power up the furnace and get the heat back on.

      Having said that, the solar system might still be useful for powering the air conditioner on those hot summer days when sunlight is plentiful. At least it could reduce the electric bill. Whether it would ever have a positive payback is still a question.

      • I designed my house with a LOT of thermal mass, and it is very tight. Instead of P.V. panels the south wall on two of the three stories will be covered with an 432 sq. ft. active solar hot air collector, for help with winter heating (not installed yet due to time constraints). The summer cooling is mainly accomplished by opening the outside air vent on the first floor and turning on the whole house fan on the third floor and the HVAC fan. Closing the house back up in the morning, usually doesn’t allow the house to warm more than a few degrees during the day. Therefore, no need to turn on the A/C. If the power goes out in the winter, it takes days, before the house cools down to below 55. Of course there are a few drawbacks, if you are gone for a long time in the winter, and set the away heat for 45 degrees, it takes about 24 hours before the house/thermal mass heats back up. Also, the summer difference in day to night temperature is almost always 30 degrees or more, and the air is low humidity, since the house is on the edge of the high desert, but no need for solar panels, just basic physics and thermal mass. And yes, I do have a 10,000 watt generator to power the well, and anything else, just in case, during an emergency. It has never been needed.

    • Is your array permitted to function without a working grid connection? More correctly, is your inverter allowed to send any AC power to your house without a functioning interconnect? In many places code requires a live grid connection, so if the grid goes down you’re still screwed even if your system is functional.

      • In my case, fire is not really an issue. For at least 25 years, I lived too far from the fire station to actually have any chance at my house being saved (they built a new station closer to me now). Generally, the fire department showed up, ran out of water and had to go over 10 miles back to town, and come back and put out the smoldering remains. I can’t remember a single house being saved. Now, we theoretically have fire protection, but the solar shingles would just put me back to where I was for years.

      • Why is the Tesla tile hung horizontally with the metal posts inboard? While the other two tiles are hung vertically with the metal posts at the edges?

        I have cement roof tiles, similar to the one on the right. They’ve been bombarded by hail in Dallas for 9 years. None have shattered like that.

      • And, a wall sized battery can’t be all that welcome in a home fire. Will homeowners need to placard their homes with toxic material hazard warnings?

        Meh, asphalt shingles cost $4.50/ft2 to replace and last longer.

      • In Colorado, I’ve had much bigger hail than that shown in the video. It has gone through double-pane windows and left tennis ball sized ice-balls on the floor of my kitchen. Remember, the hail is hitting the windows at a pretty steep angle, too. No one’s roof lasts more than about 10 or 15 years before it has to be replaced because of hail damage.

      • It depends on the slope of the roof. For steep slopes and tempered glass, it shouldn’t be a big factor unless you get some very big hail.

    • Then subtract for real world heat-induced efficiency loss like on hot rooftops, rate of efficiency loss with time, and other overstated performance in the difference between ideal and actual performance setting.

      • I put in my address and they said I’d make 22k back in 30 years with 12k coming from tax incentives. There is one large problem, besides the large trees that shade my home that I would have to cut down for a cost of roughly 20k; I asked after Sandy as I was thinking about removing the remaining trees that Sandy didn’t knock over. (Among the trees that Sandy knocked over was a large red oak that missed my house by inches.) Anyway, so in my case, I’d lose money. Plus the fact that I have to pay all of that money up front.

        But the real point of my post is this. Their number do not take into account roof pitch nor angle. They are average numbers. I know the roof pitch of my home, and it’s orientation to the sun. I ran the numbers when I was thinking about putting in traditional panels. Put simply, my house is not orientated optimally, nor is my pitch. Then add the large number of cloudy days in the NE, I am an amateur astronomer, so I am always hoping for clear nights, and of course the winter snow. My roof is covered in snow for more than half the winter for most of the last 5 years. Perhaps we need more global warming to stop that so solar panels make more sense.

    • …and I’m pretty sure the calculator makes an (unfounded) assumption that ALL electricity generated by the roof can be used. I say unfounded because what happens when you have been out of your house for a week, with the thermostat on a programmed unoccupied setback, and the whole week you’re gone comprises bright sunny days? By day 4 the batteries will all be at 100% charge, (nearly) nothing in your house is running, and then what? Where does that power go? And such a situation could easily happen under a variety of circumstances. I’m sure there are controls to shut off the panels so nothing burns up, but you don’t get paid, nor offset a kWh from the grid for which you would have to pay, so the income from that kWh is $0.00. I’m making the deliberate assumption that there is no such thing as net-metering, i.e., the state has not forced all the electricity generators to send customer-generated power to the head of the line. What I’m trying to say here is solar (and wind is even worse but that’s a different comment) cannot match output to load, so the actual utilization factor can be reduced by another 20%. At least, maybe more like 50% of the sun that shines on your roof can’t be used because you just flat don’t have a need for it. So Elon Musk is double-dipping in the corporate-welfare pool, both with the tax credits/rebates up front to install it, and the net-metering above-market mandated rates to pay you the home-owner for the energy you can’t use.

      • surely the power you don’t use or store goes to the grid and you get paid the market rate for it? (I guess some states don’t allow that)

      • Gruff you are generally correct on this, it goes to the grid even if the grid does not need it! Another subsidy.

      • “I’m sure there are controls to shut off the panels so nothing burns up”
        Nothing will burn up. Think of electricity like water, you can turn on and off. Think of the power coming into your house now, you turn it on or off as required. If not being used nothing burns up.

      • According to the calculator, I will save more than I actually pay. I’m not sure how that works. I am pretty sure it throws off the savings over 30 years number….

      • Here in California I generate a maximum of about 9500kw on a 12000kw capacity system. I have net metering and regularly roll backward, so I am a net producer of raw power. I produce during the day and none at night so I am also a net negative in dollars column mostly because I produce during peak power and use during low. I never get a check from PG&E, but I do run a credit. If I wanted a check I would have to register as a power producer and the contract would be to get credited at wholesale. Right now I get credited at retail but it always get reset to zero at the beginning of the true-up period.

      • Griff is correct that some states do not pay for net over-generation of home-owner solar PV to the utility grid.

        My FL home has an 11.5 kW PV system with a bi-directional digital meter from Florida Power & Light (FPL).

        My system uses power from solar PV first, and draws from FPL when I’m not generating enough (e.g. rain, clouds, night). In every month except December, FPL “banks” net excess power I generate & send to the grid, and will credit future-month’s power I draw from the grid. This balancing act continues up to Dec 31, when FPL simply zeros out any “bank balance” without payment to me. Effectively, I have donated my excess power generation (if any).

        Other states manage this differently.

  2. I will bet dollars to donuts that some liberal stock broker would tell you to buy stock in Tesla.

      • ,Add in a Powerwall battery, which is necessary for the roof setup to work, and that’s an extra $7,000 to $59,100 right out of pocket. Part of Tesla’s selling point is the generous tax credits — until 2019, homeowners can deduct a full 30 percent of their purchase and installation costs for solar energy from their taxes.”

        Ok, so a deduction of taxes owed’ est 7500, or of your income bracket. say 15 percent or 3250? Either way the struggling middle is paying the rich.

        OTOH , do you not need to consider future electricity prices?

      • The tax credit is great if you make enough money and have enough deductions. We pay very little in taxes as it is and use the 1040EZ most years. Maybe I get more money back from the IRS than I paid in? No thanks. More government handouts.

      • Solar City is a tax credit harvesting machine. They basically take your credit and you lease-to-own the array by paying a fixed price for electricity. I suspect this roof will be used similarly.

      • I invest in stocks. Tesla is a scam from top to bottom. Their financial reporting is dodgy (SEC is investigating), their CEO is little more then a huckster, Tesla stock is a pump and dump for the major investment banks (think Goldman Sacks), and they basically bailed out Solar City to the benefit of the Musk-Rive clan. Disclaimer: I’ve lost (not serious) money selling Tesla short. Eventually I will win bigly!

    • Well, if you’re thinking Tesla can make a profitable car without federal/state tax subsidy – maybe not so good.

      If you’re betting on the stupidity of Federal/state governments (ref: ethanol), maybe not so bad.

    • MarkW

      What’s the estimated cost of electricity?

      I want to know as well. In 30 years, I’ll use $18,000 of electricity. I may put a roof on, or I may just move into assisted living facilities. A roof here does not cost $20,000 for an 1800 square foot roof. Maybe $7500 max. So, in 30 years, I’m looking at $25,500 for electricity and a roof.

    • I wonder how fast they expect electricity to go up in cost in the future. My guess that the rate is a lot more than the 2% they assume for the discount rate.

    • I live in FL, and unlike Cliff, I estimate my 30-year electric bill (at current usage & price) at $90,000.

      I retired to FL 5 years ago, during which time, Florida Power & Light electric rates have declined 10% per kWh.

  3. Are they actually assuming that there will be no drop in power output from this “solar” roof over 30 years?

      • Er… what do you consider a “normal roof”? The vast majority in my neighborhood are asphalt shingle, 15-20 years max.

      • ” A normal roof can last hundreds of years.”

        Only if normal is slate or tile, and you never have severe weather.

      • My asphalt shingle roof is Class IV Hail Resistant. Owens Corning Duration “Storm.” When installed as part of their system by a certified contractor, it comes with a 50 year *transferrable* warranty.

        We get a LOT of hail here. No problem with this roof.

      • I installed a metal roof about 25 years ago. The paint is fading in some spots where I didn’t remove the pine needles for many months, but otherwise it’s solid. No leaks, despite occasional prolonged high, gusty winds in the fall, and a few hailstorms.

      • Not worth it unless you pump insane amounts of water, in which case the windmill will be too little. Water pumping requires little energy usually (that’s why you can get away with a windmill).

      • Even if that well is that deep, you might have a surprise. Use the old mgh and convert it to watts hour and you might have a result you don’t expect. Of course, there is the issue of losses and so on, but even so… hopefully you need reasonable amounts of water. If you need a lot, your windmill will be useless anyway.

  4. Just like with Lord Stern’s “analysis” of climate costs, the most cursory analysis with normal rules of finance and accounting shows that Tesla is running a huge scam.
    It is not so much a pyramid scheme as a funnel scheme:
    A financial scheme where the beneficiaries sit at the bottom of a great funnel collecting money that flows down to them, concentrating into larger and larger sums of money along the way.

    • You are absolutely correct.

      Unfortunately, this is EXACTLY the behavior congress (and whoever talked them into this) intended.

  5. This sentence

    “Tesla’s solar roof calculator, does not factor in the “time value of money.” Spending $250k now to get $250k back over 30 years is a really stupid thing to do.”

    applies to all renewables ( as it is to any investment) and I never saw it mentioned in the selling literature. It is, however, in my spreadsheets, and rather unsuccessful in persuading most.

    Excellent analysis.

    • Good point. A real discount rate of 7 percent should be used in governmental cost-benefit analysis:

      «Purpose. The goal of this Circular is to promote efficient resource allocation through well-informed decision-making by the Federal Government.

      Base-Case Analysis. Constant-dollar benefit-cost analyses of proposed investments and regulations should report net present value and other outcomes determined using a real discount rate of 7 percent. This rate approximates the marginal pretax rate of return on an average investment in the private sector in recent years. Significant changes in this rate will be reflected in future updates of this Circular.”
      https://www.whitehouse.gov/omb/circulars_a094

  6. Rooftops for the rich and famous would make a nice reality TV show when the real business model implodes.

  7. In 1980 I looked at passive solar and couldn’t make it look good financially even if I built and installed the panels myself. I got a bigger bang by upgrading insulation. The only way to make it work was to buy a house with passive solar. I haven’t seen much difference with solar electricity. I’d spend money only if I wanted something to play with.

    It doesn’t help that the Tesla roof is about half as efficient as typical solar panels. I ran similar calculations a while and got similar results. You can get much better bang for your bucks doing other cost-saving.

    • Bob, best passive I ever saw was tubing laid in asphalt driveway to heat owners pool aboot 40 years ago.

      • My local Lord – being in the UK, we have a local lord (in fact several, but this is nearest one) – has slashed heating bills on his stately home by putting in ground source heat pump and running the pipes through the formal gardens…

      • Griff

        Have you looked at the real cost of installing a GSHP in the UK?

        I have a small cottage in Kent and looked into it. Around 30K, which of course includes all the groundwork involved, Vs £5K from British Gas to install a combi boiler, and even that’s a rip off for a £1,000 Worcester Bosh.

        However, I was advised against the GSHP as they are only effective in well insulated houses. The amount of heat actually extracted from average 14 degrees C underground temperatures is is very little. They are also ideal for those houses when embedded in well insulated concrete floors where the constant low level heat circulation uses the concrete as a sink which releases heat gradually.

        I suspect your local Lord may well be disappointed in it’s performance if he’s installed it in a masonry built stately home, with single glazing, draughty wooden floors, cast iron radiators, and air gaps all over the place you could drive a bus through.

      • A ground source heat pump can make sense if you already have a deep hole in the ground you can drop it into: a old, unused well. Many people with older houses have them. When their house was originally built, it was outside the municipal city limits, so it had a water well. Later, when the city expanded, they got city water and capped the well. Now they can repurpose that hole and use it to house a heat pump.

    • Bob

      None of these ‘amazing’ energy savers are worth a toss unless the houses they are installed in ar super insulated with mechanical ventilation. And I mean, virtually air tight.

      I suspect they are a lot more common in the US being that you guys took to Structurally Insulated Panels (SIP’s) amongst other insulated construction methods long ago. We have only really discovered them in the last 10 years or so.

      And bearing in mind that most of our city housing stock is Victorian masonry built structures which rely on coal fires and draughty windows to maintain airflow and keep dampness at bay.

      The last ‘efficiency’ drive in this country, double glazing and central heating, virtually sealed these buildings up, and everyone wonders why they are rotten with damp.

      • I’m probably wrong on the actual temperature underground. It’s been a while since I looked into it.

      • I have a GSHP in Ontario and I was told the typical ground temp where the wells go down to (100 feet) is around 3-4 degrees C. That means the heat pump needs to overcome only a 15-degree or so gradient to heat the house in the winter, and just as importantly, in summer it can pump the heat from the warm interior to the colder ground, which is very efficient.

      • Steve Keppel-Jones

        Steve, I have no doubt you are correct in you numbers, and the UK probably isn’t far behind in soil temperatures.

        But I have little doubt your house will be somewhat less than the 200 years, 9″ masonry walls my cottage is, and most of the Victorian house stock in most UK cities are the same. I expect yours is a modern building, well insulated and sealed against draughts so the gentle heat produced by a GSHP is retained within the building.

        Only modern commercially built houses in the UK of the last ten years or so perform to any decent standard of efficiency, and they are still universally provided with gas fired, combination boilers that run radiators you could fry an egg on.

        And when I looked at a GSHP retro fit option for our building the cost was in the region of £30,000 Vs £5,000 for a conventional combination boiler. That’s also when I learned GSHP’s are utterly useless on old housing stock because of uninsulated masonry walls that simply soak up the low level heat and radiate it out to the elements.

      • The SIP’s are great, but you still need to tape the seams, especially on the underside of the roof peak, and maybe it is not a bad idea to tape all of the SIP seams in the house and use a good house wrap on the outside. They had some problems with with moisture damage at the roof seams in Alaska, especially at the peaks. Other than that, they make an extremely comfortable house, with almost no difference in temperature from floor to ceiling and no drafts. Always use an outside air source for your fireplace or any combustion source in the house. The only drawback I have found with a super tight house is, that if you don’t run water in your sink, tub, shower, toilet drains, etc. every once in a while to fill the traps?, (maybe once a month?), turning on any vent fans etc. will pull air back in from the septic tank/sewer system. It has to come from somewhere.

  8. What is the wind rating for those tiles? Do they conform with hurricane ratings for wind insurance discounts?
    Are they dangerous to other homes if they are blown off? Is there a liability issue for this danger? What is the turn around time if you need to replace a majority of the tiles after a wind event or loss due to a house fire? Can you walk on them to access other vents on your roof? Will they increase my cost of home owners insurance?

    • Tom

      I can’t answer regarding Tesla roofing.

      However, I do have rooftop solar PV in Florida & can answer for it (used as base of comparison?):

      o Solar panels sit 6″ above asphalt roof; wind-rated to 130mph (same as asphalt roof)
      o No, you cannot walk on them (but you knew this)
      o HOA cannot refuse installing rooftop solar, regardless of street view
      o No increase in home owner insurance
      o liability if panels (about 3’x6′) are blown off – unknown (now you’re just scaring me)

  9. Tesla’s warranty is “infinite,” Musk says.

    infinite = lifetime of company

    How long do I think Tesla is going to last? Not thirty years is my guess.

  10. Even as I write this I have a crew working on the traditional style of solar, erecting an 11 kW grid. I am excited to see the effect when we “go live”.

    • Speaking from my experience, if you are STEM-educated, you will go nuts the first 1-2 years playing with all the numbers. You will also soon discover heuristics of your11kW system & your local environment. Here in FL, a winter hour generates more than summer due to cloud cover & clearer atmosphere (salt spray, etc).

      Depending upon your location, you may also discover heating a house with electricity with most “southern” central air systems is WAY more expensive than air conditioning (fortunately, I only have to do this <10 days/year).

  11. Consumer Reports has an article on these. Most people only stay in their homes 13 years. You have to stay in 30 in most cases to recoup the cost of the roof. So, if you think you will live in your current home for 30+ more years, go for it…

    • Not really relevant – if this stuff is any good, the house value would go up to compensate.

      • The house value will go up very minimally with added Tesla solar roof. The average person will be unwilling to pay any more for the silly gadgets. As Bob Greene said a few posts above, buying a house that already had the solar installed was the only way he could make the math work. That is because there is a large discount on already installed solar.

        In 5 years when the battery pack is dying, the solar roof may reduce the value of the house (or when the insurance company won’t insure it because of fire risk, or whatever the issue becomes).

      • New buyer doesn’t get massive tax credit, so (smart buyer) won’t pay for make believe value of system.

      • Jeff, Don & David

        New buyer may not get the tax credits that the original owner got, but my 11.kW system annually pumps out about $2500 in Florida Power & Light utility bill savings.

        Not sure how that translates into “house value”.

      • Not sure about that. On one house near mine, the sales contract did not go through because of the terms of the rooftop solar contract. I don’t know any details, but it killed the deal. The house still hasn’t sold.

      • It could be that the panels were leased and the prospective buyers were unwilling to assume the lease.

  12. No one ever mentions the failure rates of electronics in all of this nonsense, ever notice that?
    It’s because as far as I can find no one has done any lab based lifecycle testing, and field tests are not equivalent. And they haven’t even decided on a method or standard. It’s because they all know it’s going to be junk when they start counting the number of components in the large system they are encouraging to be constructed. Most buyers of home systems are not getting a good deal, as David’s analysis shows just on the money factors. Doesn’t even take into account of maintenance costs.

    Electronic failure rates Basically multiply by the number and type of interconnects. It goes from the metalization on an integrated circuit, to the connections between that chip and the package to the board, the soldered wire connections to connectors. Each gets a factor, those are then multiplied by environmental factors, temp, humidity, thermal cycling, vibration. And then it’s gets combined to a mean time between failure.

    Everything about solar, with these tiles specifically all have horrible electronics reliability environments and configurations. How are they going to provide interconnect between all of these tiles in the sweltering env of a roof, which thermal cycles everyday, exposed to high humidity and water, all trying to get into every single connector.

    Solar farms have the same problem, at some point the failure rates will exceed the rate the panels can be replaced. That’s one fine Green Job!

    • A conservative rule of thumb would be what you spend on both your furnace and AC for the year. And that would be very conservative as they have been making home HVAC for many years. I am in my 70s and have never had a furnace or AC last beyond 15 years. And, adding to other comments, I feel it will be at least 25 years before there is a 15 year battery. Have worked in the power industry and with large lead-acid batteries that have lasted for 25+ years, however they received significant maintance and TLC and are based upon principles more than 100 years old.

      • We replaced our AC four years ago. It was original to the house — 1972 — or 41 years. Everyone who came to give us an estimate was amazed it was still running :-)

      • usurbrain

        We have a small cast iron, wall mounted boiler that heats our water and central heating in our small, very uninsulated house in the UK.

        It was here when we bought the house 30 years ago, and dates from, I think, 1982, possibly earlier.

        Every year I swear I’m going to replace it, but I never do as the only thing I have had to do was replace the pump (30 years ago) and as the piezo electronic ignition has packed in and replacements discontinued, when a really strong wind blows the wrong way, I have to get the matches out.

    • A conservative rule of thumb would be what you spend on both your furnace and AC for the year. And that would be very conservative as they have been making home HVAC for many years. I am in my 70s and have never had a furnace or AC last beyond 15 years. And, adding to other comments, I feel it will be at least 25 years before there is a 15 year battery. Have worked in the power industry and with large lead-acid batteries that have lasted for 25+ years, however they received significant maintance and TLC and are based upon principles more than 100 years old.

    • “No one ever mentions the failure rates of electronics in all of this nonsense, ever notice that?”

      Particularly as a domestic solar panel and battery installation is useless without a charge controller and inverter to provide AC power for your appliances. These are stuffed full of electronics, and electrolytic capacitors, which have a known tendency to “dry out” after a number of years. How many folks give that any thought?

  13. These or Musk’s Solar City panels–if you put these on your house you are really doing it for the guy that buys your house. So much for that “free” sunshine. And most people have no idea what NPV calculations are or what to do with them.

  14. Is there an assumption being made that the solar tiles will provide rated output consistently?

    What happens if 10% of the days’ are overcast and cloudy?

    How much of your “grid” power cost will you still need to pay?

  15. “A non-solar Tile is $11 per square foot”, but regular shingles are 70 cents a square foot. So regular shingles would be $1260 for 1800 square feet, compared to $39,330 for this nonsense.

  16. I wonder what the calculation is, when there’s a foot of snow on the roof for 3-4 months.

  17. Hold on.. the cost of electricity will triple over the next 10 years due to the advent of wind and solar power replacing “fossil power”. Makes it a whole lot more attractive at .40/kWh than at .12/kWh.

    I just hope the batteries don’t catch fire in the middle of the night however.

  18. Well let us assume that the numbers they give are actually accurate (heh) the net gain on this 30 year investment is $40,000. (assuming you don’t have to replace the roof after 30 years, or repair it) this seems to me like the absolute best case scenario. But lets take it at face value.

    So now let us compare it to a very average scenario of a simple investment.
    Put $60,000 dollars into some type of retirement account at a modest 5% growth, compounding monthly, over those same 30 years. I am coming up with about $270,000 dollars, which is a net gain of over $200,000 dollars. one way you end up with a very old roof, and 40k, the other way you end up with $270,000 dollars.

    Though it should be noted you will have to pay for a roof regardless, so the initial investment perhaps should be lowered. for the 1800 sq foot the price varies greatly depending on how you roof the house, and what materials you use. Hiring someone and using decent quality material $8,000 is not unreasonable, though on the high end. This leaves you with $52,000 and will only have a gross of $230,000, which is a net gain of $180,000. And you will have to replace that roof, which will cost another $8,000, so leaving you a meager $170,000~ dollars.

    Clearly going solar is the better investment, as it gives you a shiny roof.

    • You bring up an often overlooked part of any capital improvement or investment. The Alternate Investment amount where you take the difference between two different cost scenarios of the same improvement or investment, invest that difference at a modest rate of return, then subtract that ROI amount from the projected ROI of the more costly of the two choices.

  19. Did anyone factor in the cost of mutable replacement batteries for those power walls over that 30 years?

  20. to store the energy for my house for 1 day at least a €30000 battery is needed. Without storage, solar panels are parasites of the grid. Green energy will bring back feudal times.

  21. Another thing to factor in is assumption about electricity prices.

    Say electricity prices plummet in 15 years (perhaps because there is a massive solar breakthrough), then the negative NV increases even further, by virtue of your observation that this is just a scheme to buy 30 years of electricity in advance.

    • Perhaps we stop wasting money on wind and solar and start building reliable and cheap power stations again?

  22. All money upfront and a payback > 15 years is probably a bad idea no matter what you’re buying.

    There’s also the issue that most people won’t be in their current house 30 years from now, so unless solar tiles boost the sales price of the house, the future owners get most of the benefit. With the numbers Dave gave the net cash cost is $46,100. If you sell the house 10 years later, you’d need about a $30,000 premium in the sales price (net after selling costs) to get your investment back out.

    Might be worth considering if: (1) you live in an area with higher than average electricity costs, (2) you have high confidence you will remain in the house for at least 20 years, and (3) you need to replace the roof anyway.

  23. Once the subsidies end, the whole thing makes no economic sense. Which is why the new Greening is upperclass elitist: only those with excessive discretionary income can afford it.

    When does planetary necessity replace narcissistic virtue signaling as a force for the Greening? When the emergency faces us clearly. Certainly not now. And the “best” scenarios say that “may” be in decades from now. Others, like me, say that will never happen. The weather will always be a local phenomenon and be dealt with locally. No government will, long-term, cripple itself to theoretically help a foreign nation.

    But as I sit here a radio report says a paper out of Washington claims US temperatures are already much higher than in the 80s and extreme weather events are already attributable to anthropogenic climate change. Really?

    We live in a time when one measurement can be claimed to have two values. How odd.

      • And quite often in totally unsuitable locations – there’s a row of “public housing” not far from me, with solar panels covering the roofs, they even face South. But there’s one small problem – between the houses and the sun are a dozens of mature trees, which obscure the panels for a significant proportion of the day. But never mind – it’s only tax payers money, after all….

  24. There is no way these solar panels will last 30 years. Large batteries only last 5-10 years and this is NOT figured in by the calculator. New batteries every 10 yrs completely blows up their calculations. Even if they did, their figures in the best case mean you won’t make a profit until 25 to 27 years in. No one wants to wait that long for an investment. Subsidies are great, but can be cut off at a moment’s notice when governments change their mind. What happens if Tesla goes bankrupt–what about their warranty then? If the entire roof has scattered solar on it, fire departments will not want to go on the roof in a fire. Soar is DC, very dangerous to firefighters.

    • And what of the middle class tax payer, how long before he makes a profit on his tax..

      Oh ya, that’s right, 83 years from now it might be .000001 degrees cooler.

  25. It’s funny. When I first read the analysis I mistook ‘Powerwall’ for ‘Powerball’ and it made perfect sense. Win the lottery and you can afford pay for this toy.

  26. I dont want to subsidize this crap, just like I dont want to subsidize $100k electric cars. Elon is a selling snake oil.

  27. I put my address in (this is in North Carolina) and it said that after 30 years I would generate $14,900 worth of electricity. But the cost, with tax credits, would be $17,500. So, after 30 years I would still lose money. What a deal. And North Carolina is still a southern state. Imagine how much worse it will be in a northern state.

    Wake me up when the return on investment is 15 years, in Maine.

  28. My total electricity costs over the year are only about $1500 on a 4 bedroom house. That comes to $45000 over 30 years. Even at $2000/yr, this only comes to $60,000 over 30 yrs but Tesla assumes $85,700 electricity costs (probably California prices). So the math fails without even doing NPV.
    Most people intuitively use a several year payback for energy efficiency investments. For example, if you add insulation to your attic and it saves you $50/month and costs $1000, you have a 20 month break-even period which is good. If you tell someone their break-even date is month 300…..

    • I think their calculator uses your home’s location and size to estimate electricity costs. The only input it asks for is your address. It returned a fairly close estimate of my roof size and average monthly electricity bill. Google Earth has an application that will instantly tell you your roof’s solar power potential.

  29. I have done some very similar analysis of the costs/benefits of a more conventional solar panel system. Shockingly, with very similar results.

    Here are some of the factors that are generally overlooked:

    * Time value of money. This is huge as the article demonstrates.
    * Maintenance. It’s never zero or free. The cost of cleaning the panels/tiles once every two years is considerable.
    * Risk. If any of the assumptions fail to work out as predicted, the homeowner who paid upfront is likely to be the one carrying the can. That becomes a certainty if the seller/installer goes out of business which is pretty common with new/immature industries.

    • “If the seller/installer goes out of business which is pretty common with new/immature industries”

      Yep, my local paper lists (yet) another “Renewable” company, which has just been wound up, in today’s Business section…

  30. Rechargeable batteries have a limited lifespan and will have to be replaced multiple times over three decades. Does the power wall warrantee last for thirty years?

    • The optimum charge/discharge cycle for LiIon batteries is from 90% full to 10% full. There is no chance that this optimum charge/discharge cycle will be followed for this type of use. So the odds of the battery lasting as long as the pampered “lab test” batteries is slim to none.

  31. Only three decades as a typical lifespan for a roof?
    I just had my (Edinburgh) house re-roofed completely, and the north-facing slate section was 95% original, at nearly 120 years old. The south-facing slope (gets the brunt of the heat and the wind/rain)was more knackered, and had been extensively repaired, only about half of the slates were original, so call it a 60 year lifespan.
    Even on my father’s house, thrown up by shoddy builders in the 1970’s, the concrete tile roof was still intact at 43 years.
    What are American roofs made of?

    • Most have asphalt tile shingles. Very cheap. Maybe last 10-15 years. Easily replaced.

      I have Spanish-style cement roof tiles. Not cheap. Very durable. And so far, mostly impervious to hail damage.

      • Furthermore, replacement asphalt shingle roofing can be laid over existing shingles (up to 5 layers by some codes) thereby reducing the replacement costs.
        Another consideration is the construction of the roof support structure (rafters, purlins, ridge beam, etc) necessary to support the weight of these tiles. In many areas of the country (where these things should work best) the roofs are not designed to support snow loads (there is no need). If your roof is not designed to add the extra weight you’ll need to beef it up.
        Then there is the additional maintenance of other roof mounted systems. How sensitive are these shingles to foot traffic?
        As we say in engineering regarding fads this is “A bad idea whose time has come.”
        I think I’ll pass on this idea.

    • Here in the USA we have more extremes of weather and temperature. In Phoenix Arizona temperatures can reach 120F and in Minnesota it can go down to -50F.

      Asphalt shingles may last only 10-20 years. Cement tile should be good for 50-100 years but the underlying felt and timbers will likely fail before that.

      The 30 year average is probably about right. But it’s kind of meaningless — like computing the average weight of a mixture of grapes and bananas.

  32. Ha. David. Last time you pretended that electric vehicles are not going anywhere by doing an obviously irrelevant linear extrapolation. Now you’re taking a 10% discount rate for a home improvement project. That’s not how science works. Youre supposed to make the most pessimistic assumptions (for your preferred outcome). But you are pretty obviously just weighing the scale towards what you want to see. Sad! You should do better. If only because it’s more fun that way.

    Cheers,
    Ben

    • My base case used a 2% discount rate. 2% is about what someone could earn in 5-10 year Treasury notes. The 30-yr Treasury is paying close to 3%.

      This is not science. It’s economics. All business investment decisions are based on discounted present value and/or discounted cash flow. Most business investments use a 7% discount rate. Some use 10%.

      • Woops, was reading this on my phone and did some sloppy scrolling to skip the 2% part. Snarky comment retracted.

        Hey when are you guys going to post something about the cancellation of those nuclear plants – purely for economic reasons? Or is the right wing blogosphere still pretending that nuclear is super cheap and being held up purely by ‘green lunatics’? Oh and let’s not forget those 25 GW of solar installed in China during 2017H1 ;)

      • Snark is always appreciated by this author. When I get a chance, I’ll put the ChiCom solar GW into graphical perspective.

      • Looking forward to it David.

        Oh do compare it to the number of coal fired plants actually being built rather than those announced. In China the two are only marginally correlated.

      • Enviro’s due everything in their power to make nuclear expensive, then crow about how nuclear can’t compete with their government subsidized fantasies.

      • Just like communism, environmentalism is a revolt of the elites using false propaganda. That explains why nuclear is banned: it potentially generates enough energy to provide freedom for all. Solar and wind, by their scarce and unreliable nature, cut off power to the lower classes and will result in slave states.

      • I did correct the error.

        The greent@rds at the World Bank are adding in mythical numbers to come up with $5 T in subsidies.

        Not all of that is in the form of cash money. Much of it is in avoided costs — things the fossil fuel crowd are responsible for but are excused from paying for. They include “not only supply costs but also environmental costs like global warming and deaths from air pollution and taxes applied to consumer goods in general.”

        Real numbers:

        Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013

        Release date: March 12, 2015
        Revised: March 23, 2015 (revision)

        Executive Summary

        This report responds to a September 2014 request to the U.S. Energy Information Administration (EIA) from U.S. Representative Fred Upton, Chairman of the House Committee on Energy and Commerce, and U.S. Representative Ed Whitfield, Chairman of its Subcommittee on Energy and Power, for an update reflecting Fiscal Year (FY) 2013 data of two earlier EIA reports on direct federal financial interventions and subsidies in energy markets covering FY 2007 and FY 2010.

        As in the prior EIA reports on this subject, the scope of the present report is limited to direct federal financial interventions and subsidies that are provided by the federal government, provide a financial benefit with an identifiable federal budget impact, and are specifically targeted at energy markets. As requested, the report focuses on subsidies to electricity production and also includes subsidies to federal electric utilities in the form of financial support.

        Given its scope, the report does not encompass all subsidies beneficial to energy sector activities (see text entitled “Not All Subsidies Impacting the Energy Sector Are Included in this Report”), which should be kept in mind when comparing this report to other studies that may use narrower or more expansive inclusion criteria. Consistent with EIA’s role and mission, this study focuses on developing data rather than drawing conclusions or discussing policy issues related to subsidies, and in that regard differs from some other reports that address energy subsidies (see text entitled “A Wide Variety of Definitions, Methods and Estimates Occur in Other Energy Subsidy Studies”).

        […]

        Using the EIA’s numbers…

    • Since the concept of NPV seems alien to you. The Inverse article cited an example of a solar roof installation:

      The homeowner would “invest” $52,100 into a solar roof and $7,000 into a Powerwall battery, a total of $59,100. He would get a $13,300 tax credit and (according to Tesla) save $85,700 on electricity over the next 30 years. A net “gain” of $39,900.

      If that same homeowner invested his $59,100 in 30-yr Treasuries (3.0% yield), in 30 years he would have $143,451. Subtract $85,700 worth of electricity bills and he would have a net gain of $57,751.

      Hence, the solar roof has a negative NPV.

    • Until someone presents some evidence that electric car sales are actually picking up, then a linear projection is just as valid as any other. Certainly more valid than a projection that assumes sales are about to take off.
      As to the discount rate, David gave 3, 2% as used by Musk, 7% as used by most government rating agencies and 10% as used by oil industry.
      He didn’t just give 10% as you so dishonestly claimed. Secondly, you failed to mention why 10% was wrong.

      If this the best you can do, can I recommend reading up on the first rule of holes?

  33. No mention of where those (very large) tax credits come from. Last I checked, the Feds allow $6,000 total in tax credits , over a period of several years. That basically pays for the panels (6KW) Inverters run around the same price, depending upon type. The rest of the stuff required doesn’t cost a whole lot and if you do it yourself, figure on roughly $14,000 outlay, of which $6,000 can be taken as a tax credit. I don’t know what a company would charge to install the panels. Remember, that those panels need to be removed and reinstalled if the roof requires new shingles.

    • The tax credit is a full 30% of the roof’s installation cost through the end of 2019…

      Part of Tesla’s selling point is the generous tax credits — until 2019, homeowners can deduct a full 30 percent of their purchase and installation costs for solar energy from their taxes. After 2019, it goes down to 26 percent; after 2020, 22 percent; and after 2021, it’s zero for residential systems and 10 percent for commercial. Congress could extend those tax credits — they previously did so in 2015 — but for now the pressure is on the consumer to go solar ASAP.

      https://www.inverse.com/article/35106-tesla-solar-roof-actual-price

      If you spent $50k on a solar roof in 2018, you would get a $15k tax credit.

  34. Most attractive looking solar NPV or IRR models make an assumption of rising electricity costs, sometimes they are chosen to make the numbers work.

    Most conventional panels will last 35+ years, with a 5% to 10% degradation in output primary because the glass front gets less transparent over time. Some early silicon panels are okay 50 years later, but the Tesla models are unproven and accelerated lifetime testing sometimes does not tell the whole story. The inverters are less reliable than the panels, IMHO MTBF 7 to 10 years, the batteries are even less reliable.

    Overall results are very location dependent: if you live in Tempe, AZ where you have lots of clear sunny days and your primary energy use is for cooling, it can be a good deal. If you live in Seattle, it will never work out.

    What your net metering deal is can make a huge difference – in most locations you pay retail for the electricity and get paid nothing or wholesale for what you send back onto the grid. If you have a peak dependent rate, using solar to shave peak demand may cut your bill. Having enough battery capacity to run your home off grid is very capital intensive.

    Lighting, heating and cooling for homes and offices is by far the most economically feasible application for solar – supply and demand are relatively co-variant and minute to minute dispatch-ability is not required. Industrial and transportation use of solar will require that yet to be found efficient storage mechanism – much more efficient and much less expensive than current batteries.

  35. It’s amazing what ingenious ideas can be developed when the goobermint is subsidizing. (Another prime example of what happens when profit motive is not driving efficiency.)

  36. I have been curious about how all those solar shingles are electrically connected to each other. Series or parallel? Individual wires for each shingle? How reliable are the connections, and how to you find and repair faults after the roof is installed? It seems like a nightmare to me.

    • Speaking as an electrical engineer who has done lots of work on location- excellent questions. Yes it is a reliability nightmare.

  37. Clotheslines are the only surefire economical solar project, if combined with intermittent wind.

    • The glass encased panels may last 30 years, however they will lose about 1% capacity every year. And the batteries will definitely not last that long. You will be lucky to get 10 years out of one set, so that adds to the expense. The DC to AC inverters will probably not last 30 years either and will need replacement/refurbishment at least once during that interval. It’s difficult to see how this could ever make economic sense.

  38. Tesla looks to $1.5bn bond offering to boost Model 3 production
    “Tesla is to boost its cash reserves with another $1.5bn as it tries to stave off the liquidity pressures caused by its headlong rush to become a mass-market car producer.
    The latest capital raising, a bond sale announced on Monday, marks the first time the company has turned to the markets for an issue of straight debt. It is set to lift the amount it has raised since the start of 2014 to $7.9bn, with Wall Street expecting further hefty cash calls to come.
    https://www.ft.com/content/463e6db4-7b90-11e7-ab01-a13271d1ee9c

    • Tesla seeks $1.5 billion junk bond issue to fund Model 3 production

      DETROIT (Reuters) – Tesla Inc (TSLA.O) said on Monday it would raise about $1.5 billion through its first-ever offering of junk bonds as the U.S. luxury electric car maker seeks fresh sources of cash to ramp up production of its new Model 3 sedan.

      The move to issue junk bonds – lower-quality investments that offer higher yields – represents a bet by Tesla Chief Executive Elon Musk that bond investors will be as hungry as stock investors to back the company on expectations that its Model 3 will be a hit.

      […]

      So far, Tesla has been raising money to pay its bills with a combination of equity offerings and convertible bonds, which eventually convert into shares. In March, the company raised $1.4 billion through a convertible debt offering.

      Following the announcement, Standard & Poor’s reaffirmed its negative outlook for the automaker and assigned a “B-” rating for the bond issue – deep into junk credit territory. S&P also maintained its “B-” long-term corporate credit rating on Tesla.

      “We could lower our ratings on Tesla if execution issues related to the Model 3 launch later this year or the ongoing expansion of its Models S and X production lead to significant cost overruns,” S&P said in a statement on the bonds.

      Moody’s assigned a junk “B3” rating to the bond issue and said the company’s rating outlook was stable.

      The rating agency said the overall company’s “B2” rating was supported by the fact that if Tesla ends up in serious financial trouble, its brand name, products and physical assets would be of “considerable value” to other automakers.

      The automaker’s debt load increased significantly last year when it bought solar panel maker SolarCity.

      […]

      https://www.reuters.com/article/us-tesla-offering-idUSKBN1AN13I

      • AAA used to be the ranking you would expect for a country.
        On the other Exxon is probably worth more than a lot of countries, and is better run than almost all.

      • Indeed.
        Nikola Tesla ended talking to pigeons because he didn’t care much about money.
        Elon Musk who usurped Tesla’s name may end up talking to pigeons because he is too greedy.

    • Such junk bond issues are frequently the last resort of management when confronted by desperate liquidity crises.

      • Tesla will either “turn the corner” with the Model 3 or rapidly run out of OPM (other people’s money).

        If they don’t generate positive cash flow next year, they will probably be seeking out a merger partner.

  39. Our company has redone one of its office buildings with vertical solar panels. Unfortunately, the first batch of panels didn’t work. In the second batch, some were off color. But the worst is, more than fifty percent of all the panels face east or north.
    But it looks good. (/sarc)

  40. SolarCity essentially failed as a business model but rather than admitting that the Musk spin machine tucked it into the overall debt load and moved on to the high-cost mfg state of NY with a massive giveaway deal for a building in a depressed area. That should be good for a few more years of free stuff and debt issuance.

  41. ‘Musk has said the tiles will cost “less than a normal roof.”’

    But I already have a normal roof. That’s paid for.

    • Lucky for Musk his target customers are like Griff and not capable of rational thought or basic economics.

      • Some buyers will be motivated by principle, not just by cost.

        And many more will be motivated by cost… lets see how this works out in actual sales.

        (30% of homes in Queensland, Australia, have solar panels now: does that mean 30% of households there are not rational?)

      • Queensland households are probably motivated by ridiculously high electricity prices.

        Tesla buyers are mostly motivated by the Stark Industries factor…

      • “Griff August 9, 2017 at 4:21 am

        (30% of homes in Queensland, Australia, have solar panels now: does that mean 30% of households there are not rational?)”

        Where did you get that figure from?

      • “Some buyers will be motivated by principle, not just by cost.”

        What would you know about principle, Skanky, you mendacious little paid propagandist for the ‘Unreliables’ spivs and slanderer of anyone who doesn’t stick to the AGW script?

        Have you apologised for lying about Dr. Crockford’s scientific credentials yet?

  42. Well, I do use solar–to power a well on the property that would have run about 10,000 to get grid power to. Direct connection of panel to pump without the need for battery storage. It is NOT my house hold water supply, just some irrigation and stock water. Do have a 5000 gal storage capacity–takes the pump 2-3 sunny days to fill it completely, and then the system shuts itself down until I drain the tank some.

    Thought about the house–google earth has a hard time seeing my roof for the trees, and since the long axis of the house is n-s, the roof isn’t well situated for solar. Besides, the existing r-panel steel roof underlain with 5/8 plywood decking. will still be functioning as expected long after I’m gone. I do have a couple of generators on hand as I have a freezer and two refrigerator/freezer combo’s running, one of which is duel fueled gas/ propane. Haven’t needed either for emergency use in the 8 years I’ve been here.
    Average power use/month is under a hundred dollars, and it only reached 200 one time–learned that when it is extremely cold (15 f) it is more cost effective to supplement the ductless minisplit system with a space heater rather then depend completely on the system heat pump.

    All in all, I don’t think Tesla (Musk’s) has anything at all to offer here.

  43. With the way power,electricity, prices are exponentially rising here in Australia, with no remission, any system off the grid could pay back in a shorter time than presently calculated.
    It is ironic that the power price rises are there because of the building of ‘renewables’ into the grid.
    Under Australian taxation law this financial year 2017 to 30 June 2018 a system could be purchased for sole business use and immediately deducted if installed and working as long as it cost less than $A 20,000, or could be depreciated quickly, if more.
    For a business with cash, the best the Commonwealth Bank gives on an IBD is about 2.5% interest per annum, which is taxed from the first dollar at the marginal rate.
    Depending on reliability, there is a business case to sink some as capital into voltaics and benefit from back up reliable power in one’s own reserve off grid, as well as increase the capital value of the business.
    There is an opportunity cost for not doing this.
    Power prices just rose 20% last year, and the way things are going, will themselves become intermittent due to experimental grid design being inflicted on the end user, especially in SA and next, Victoria.
    Not everyone can vote with their feet and move the business.
    Desperate measures for desperate times.

  44. Musk is a despicable sleazy con artist.

    The calculator doesn’t show on the Canadian version of the web page. I would suspect Tesla received legal advice on Canadian advertising standards and they were probably not too sure about how to calculate the effect of snow and ice.

    I checked the Tesla car web site range calculator, it does allow for a sub zero temperature but only to minus 10 C. Should go to Minus 30 C to be realistic for our climate.

  45. Mr. Middleton; Not that I’d trust Musk, but Mr. Crosbie made a very significant error when using Tesla’s cost calculator that you didn’t mention, so I hope you didn’t repeat it.

    The cost calculator asks for the square footage of the house itself (interior), not the area of the roof. As you increase the number of stories, it decreases the cost of the roof (smaller roof due to lower footprint for the same sf). That makes sense because most homeowners know the size of the house when buying, but not the size of their roof, and it helps in estimating power demand.

    • To update – I forgot to look closely enough at the screenshot from the Tesla page, which states “Calculations are based on a 2,226 square foot roof”, but plugging in different figures shows the difference wasn’t anywhere near as significant as I thought it would be – less than $1,000 over 30 years.

      On a side note the listed costs aren’t even the total costs you can expect: “Taxes, permit fees and additional construction costs such as significant structural upgrades, gutter replacement, or skylight replacements are not included.”

    • The cost calcultor just asks for your address. From my address, it calculated the area of my roof and average monthly electricity bill fairly closely. Google Earth has an app that quickly calculates your roof area ans solar power potential just from your address. The Tesla calculator allows you to edit its estimates, but it never asks for interior square footage.

      Here’s the link to the Tesla calculator…

      https://www.tesla.com/solarroof

  46. Roughly 20-30 year life on roofs, about 3% of homes in my area would need to replace their roofs anyway. That’s the market with only marginal cost to add solar. Having replaced my roof 5 years ago I would have gladly paid the difference since I ended up slapping a panel array in it afterwards. Here, we have 10% solar penetration so I suppose the perspective is different.

  47. Musk totally ignores innovation and assumes a static world. Nobody can predict the future. Since nuclear technology has been demonized most likely research in this field may bring new energy sources with small footprints and high energy density, obsoleting solar and wind as inferior technology. Progress always amounts to less dependency on land and nature.

    • Musk IS innovation!

      His disruptive technology is part of a new, renewable, industrial revolution -which is passing some parts of the US by

      • Very funny!
        (no really it is…)

        but you take a look at just the renewable energy and EV sectors in Europe and India and tell me there is not a profound change happening amongst power companies and car makers…

        Look at the top US companies and google their policy on sustainability/renewables and see what they are doing in energy saving and renewable power for their operations.

        your graphs hide that, but it is there.

      • Griff… psychobabble about sustainability and renewables policies can’t be graphed.

        Psychobabble…

        Meanwhile, renewable energy is also expected to see significant gains. “U.S. wind power, which provided 6% of total U.S. electricity in 2016, is expected to have a 9% generating capacity increase this year and another 16% in 2018,” said Gruenspecht.

        “Solar power, which provided 1% of total U.S. electric generation in 2016, is expected to see the largest rate of growth in utility-scale electricity generating capacity of any energy source, increasing 36% this year and more than 10% in 2018,” he said.

        http://www.washingtonexaminer.com/coal-to-dominate-us-electricity-market-over-next-two-years/article/2630922

        He starts with wind output (6% of generation) and then babbles about 9% and 16% capacity additions. In terms of output, this equates to (1.03 * 0.06) + (1.05 * 0.062) = 6.5% of output.

        Solar provided 1% of output. A 36% increase in 1% is still 1% (1.36%)… Plus 10% in 2018 is still 1% (1.496%).

  48. They rely on the average “Green” or “ACC believer” to be the utter morons they are and not do the checking that you did.

  49. Headlines such as this can be easily altered to understand the true motivations.

    Alphabet Sees Power in Molten Salt, a New (tax credit) Moonshot

  50. I don’t understand the logic of a static (home) lithium-ion battery, the advantage of lithium-ion is size and weight for a given capacity (energy density) so it’s a good choice for a cellphone, laptop or electric car but for home lead-acid would be a better choice at 10% of the cost. Lead-acid is also greener since old batteries are 90% recycled into new batteries.

    It’s almost as if Musk is just trying to sell more of his batteries to gullible people regardless of the financial and environmental cost. Imagine that,

    • Jaffa, thanks for pointing out that obvious and undeniable fact. Nobody living off the grid is going to do it with lithium batteries, that’s madness. I lived off the grid for three years using 12 two-volt lead-acid batteries. Big and clunky? You bet. Cheaper than lithium? Duh.

      Regards,

      w.

  51. A factor that I haven’t seen here yet, is that residential PV arrays are paid at the retail rate. This automatically happens if you are generating power to offset your monthly bill. Part of the difference between wholesale and retail is funds to maintain the transmission and delivery infrastructure. If everyone were to adopt a solar roof that repays all of their consumption, there would be no money to support the infrastructure.

    Kinda like the electricity to recharge battery powered cars has no road tax as gasoline does. If you charge your electric car at home, you pay no road tax.

  52. If you are grid connected, what is the incentive to buy a powerwall battery? The grid serves that function unless you have time-of-day metering. Just because maximum generation does not coincide with max need, that doesn’t create a financial incentive to “do the right thing”

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