Guest post by David Middleton
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.
[…]
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:
where
Ct = net cash inflow during the period t
Co = 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
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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.
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)
The virtue signalling alone is worth its weight in gold.
-IF- those numbers were true then buying $70k of TSLA stock would generate trillions in appreciation over the same period.
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.
‘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…
https://www.youtube.com/watch?v=75NLx7v-a3Y
“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?
30% of homes in BRISBANE only. Queensland is a very big state.
“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?
If that gig does not work out, he can always hyperloop over to the next one.
Elon Musk has never seen a 27 year old roof.
Ignoring the time value of money in order to sell sparky roofs must be illegal, no? How is this not afoul of the “Truth In Advertising” laws?
w.
Very good question!
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.
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.
The answer to government failure is always more government. It’s almost like they got a fevah and the only prescription is more cowbell.
https://youtu.be/Q_MWeOs8Ffg
GM Holden just did.
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.
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.”
At least Tesla claims that the coat includes the removal of your old roof… 😉
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
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.
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…
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%).
The Data laughing Gif is won of my favorites… LOL!
This ain’t going to happen…
https://www.fool.com/investing/2017/08/09/elon-musk-should-tell-the-truth-the-whole-truth-an.aspx
They rely on the average “Green” or “ACC believer” to be the utter morons they are and not do the checking that you did.
Headlines such as this can be easily altered to understand the true motivations.
Alphabet Sees Power in Molten Salt, a New (tax credit) Moonshot
More woe…..
https://seekingalpha.com/article/4096869-teslas-q2-10-q-tale-woe
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.
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.
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”
This is going to hurt….
http://www.reuters.com/article/us-tesla-truck-autonomous-idUSKBN1AP2GD?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29
I’ve seen that movie…