Solar Panels & Tesla Powerwalls?

Are you excited about solar power?

Wait until you check out the price tag.

I’m into technology. I like when new things are invented - I get excited about it, I think it’s cool, and I like to learn about new products. Obviously, that means I stay abreast of Tesla and the stuff they’re doing.

If you didn’t know, Tesla has been investing itself into solar technology. For decades, solar was a really stale technology. There was a big boom in the 1970s, and then it was largely derided until somewhat recently. Solar energy has always had one gigantic criticism against that has prevented it from being more common in homes. That is the classic question of, “What do you do when it’s dark outside?”.

Well, there’s an answer now. Solar energy needs battery storage to be a viable option, and nobody builds batteries better than Tesla. Check this out - Tesla has a product called Powerwall. It’s a gigantic battery that is installed in your home and tied into your electrical system. It can be powered via the existing electric grid or via solar panels. Of course, Tesla also provides solar panel and solar shingle products.

A Powerwall is $6,500, requires professional installation, and it looks like most homes would actually need two to be fully charged via battery versus grid energy. The point is, they’re not cheap. Like all things technology, future innovation and scale will most likely reduce costs. It’s entirely plausible that in the medium term most new homes will be built with a Powerwall or a similar device.

Tesla is also about to mass produce these really cool solar shingles called Solar Roof. They’re fantastically expensive, but the idea is great. Again, they’re not ready for primetime yet (too expensive and not produced at scale), but at some point in the future more and more new construction homes around the country will have a Tesla Solar Roof and a couple of Powerwalls.

What’s with all these solar spam calls?

You know what I’m talking about - “Hey, it’s Bryan from Whatever Solar. Are you READY FOR SOLAR!!!” They’ve got a pitch about how cheap solar is, how it’s so green, and how you’re losing money unless you sign up today.

It’s tough for me to make a blanket statement and be able to defend it, but I’m going to do it anyway - solar panels in the Treasure Valley are not a good financial decision. Here’s why:

Google has a fantastic program called Project Sunroof. Type in your address and it will pull our local utility rates, the average weather, the sun exposure on your roof, and the size of your roof. It puts all together and spits out three scenarios for solar: Buy, Lease, Loan.

Because most of Idaho’s energy comes from renewable hydro-electric sources, our power is really cheap and it’s carbon-neutral. As such, solar isn’t a financially sound option for energy here. That might be why there are so many companies in town trying to sell leased solar panels. Leased panels are not a great financial option. First, the owner doesn’t own them and as such does not get a tax credit. Second, the leased cost is inflated so that the leasor can earn a profit. It’s a classic rent-seeking business model. I entered my home address in Project Sunroof and leasing solar panels would cost me an additional $7,700 over twenty years.

The only option that kind of makes sense is to purchase a solar system with cash upfront. HOWEVER, there’s an opportunity cost of not investing that money over 20 years. Again, using my typical Boise suburban home as a test case, over 20 years my utility bills would be $5,408 less if I purchased solar. That doesn’t count the gains of investing that money over 20 years. That calculation is called “Net Present Value”. Once you include that cost, it’s a loss of $800.

WHO IS READY FOR SOLAR!?!?!

Basically. . . . .not a lot of people. In our southwest Idaho market, it’s just not financially competitive. If you want a solar electric system for personal and/or environmental reasons, that’s perfectly fine and admirable. It’ll just cost a premium over our current hydro-electric system.

As the cost of solar panels decrease over team, we might see it become more affordable with a purchase model. I could see this becoming more popular in new construction homes. However, it will likely never be financially viable via a retro-fitted lease or loan system.

What do you think about solar energy? Have you ever thought about it? Are you still considering it? Leave a comment with your thoughts!

Alex PriceComment