Why Tesla's Solar Roof Is A Bad Buy

It’s a Roof! It’s a Solar Panel! It’s a Luxury Item!

Everyone needs electricity. Everyone needs a roof. Everyone does not need the Tesla Solar Roof.

In fact, the Tesla Solar Roof is the gold Apple Watch Edition of the energy industry.

When Tesla started taking $1,000 deposits on its Solar Roof, in California only, there was a rush of reports praising the manufacturer for beating expectations on price. Bloomberg declared the roof was “cheap enough to catch fire.” CNBC noted the estimated $21.85 per square foot was $2.65 less per square foot than Consumer Reports had predicted. Greentech Media highlighted the durability of the tiles and “Infinity Warranty.”

At the time of the gold Apple Watch Edition launch, breathless pundits claimed that at $17,000, the watch “might be too cheap,” and that a $10,000 Apple Watch “wouldn’t be crazy.”

Of course eighteen months later, the gold Apple Watch Edition was declared dead.

The mistake of Apple, or at least the mistake of the reporters that Apple misled, is in comparing the Apple Watch Edition to a Patek Philippe, a Rolex or a Cartier. In truth, the Apple Watch is competing with the fitness band and other wearable electronics that augment the smart phone by providing ambient awareness of notifications, alerts and other peripheral engagement. A $17,000 timepiece might not be unreasonable. A $17,000 fitness band is absurd.

In much the same way, Tesla is misleading the public by comparing their Solar Roof to tile and slate roofs, rather than to solar energy in its many forms. As you will see, a real comparison is not flattering to Tesla.

The Infinity Myth

A $10,000 electronic timepiece doesn’t make sense because the gadget is obsolete in a year. You can’t upgrade or replace the guts of Apple Watch, and you don’t want to show off a useless piece of consumer electronics.

While the time frames are a bit different, the same thing will be true of the Tesla Solar Roof. The tile might last forever, but the electronics in a string inverter are typically warrantied for 12 years, and the production potential of the solar panels will degrade 1% the first year and a half percent a year after that, making the solar generation capability obsolete in 30 years. At that point, you’ll have to replace the solar roof even if the material protecting the house from rain has maintained its integrity.

Here’s Tesla’s video touting its Solar Roof in a hail test:

Note that the conventional slate and tile roofing materials are mounted incorrectly to show their weakness. Most tile roofs are a much more rugged cement composition. Even so, the Tesla Solar Roof durability test employed trickery to show that it was more durable than regular roofs. How about comparing the Tesla Solar Roof with a standard solar panel?

Here’s Solar World’s hail test from 2013:

Solar panels are not damaged by hail. If you put solar panels on a standard roof, they’ll protect the roof and increase the lifespan. Then, when the panels have gone past their useful lifespan, you can take them down and replace them. You wouldn’t leave them up forever just because they haven’t been damaged by hail.

Fish nor Fowl: The Tesla Solar Roof Isn’t Very Good at Solar or at Roof

Tesla’s fundamental value proposition is that it’s a high-quality roof that really isn’t all that expensive because you save money on your electricity. The problem with this claim is that the way you judge a roof and the way you judge energy is completely different. You want a roof to be strong, attractive and keep you dry. You want your electricity to be as inexpensive as possible. Electricity at $0.19 per kWh provides no additional benefits to electricity at $0.07 per kWh. It’s the ultimate commodity.

To illustrate its value, Tesla provided this handy chart comparing the Solar Roof with regular roofs:

The chart shows that the cost of the Solar Roof plus the value of the generated electricity has a negative cost of around $2 a square foot. The cost of various non-solar roofing options is between $6 and $17 a square foot.

John Cromer, a mechanical engineer turned solar educator and a regular on Reddit, fixed the chart for Tesla:

If you consider high-quality solar panels affixed to a standard asphalt shingle roof, the cost of your new roof and new panels when accounting for the value of the energy generated is negative $13 a square foot. That’s a lot more savings!

According to HomeAdvisor, the average roof, fully installed, costs $7,060. The average roof is 3,000 square feet, meaning the cost of a new roof is $2.35 a square foot.

The average home will support a 7 kilowatt solar array, which currently costs about $3.20 per Watt installed, for a total cost of $22,400. Add that to a $7,060 roof and your solar energy system plus your new roof costs $29,460.

That’s significantly less than the Telsa Solar Roof cost of $65,500, which is a 3,000-square-foot roof at $21.85 a square foot.

Based on Dow’s experience with the Powerhouse solar shingle offering, the power capacity of solar shingles is likely to be less than that of standard solar panels. Dow gave up on their offering because manufacturing photovoltaics is a cut-throat business. The winners have to constantly cut prices and increase power capacity by making manufacturing every more standardized and efficient. You simply can’t compete on a commodity basis with a unique, differentiated product. Energy is a commodity.

Head-to-Head Combat

We went head-to-head on a standard solar panel installation, pitting the actual re-roof and solar installation of Butch Deal, our co-founder and Senior Vice President of Systems, against Tesla’s Solar Roof. We increased the size of Butch’s installation, extrapolating from his actual costs, to provide an apples-to-apples comparison with the Tesla results. Here’s the estimate from Tesla:

Reverse engineering the Tesla calculations to offset Butch’s $150/month electricity bill at about $0.10/kWh, it appears that the roof’s power capacity is around 8 kilowatts, which makes sense given the lower power values of solar shingles. According to Tesla, 60% of the shingles would have solar-generating properties. Here’s the Tesla Solar Roof summary:

1. The Tesla Solar Roof costs $55,600 installed
2. The Federal Tax Credit reduces the installed cost by $14,200
3. The net cost of the Solar Roof after the tax credit is $ 41,400
4. The total value of the solar energy generated over 30 years with 8 kW of power is $ 43,100

This means the total financial benefits over the 30-year useful life of the Tesla roof-integrated solar energy system is $1,700.

We used Geostellar’s estimation tool (disclosure: I’m the founder and CEO) to run a comparison:

To offset his $150/month electricity bill, Butch would install 40 solar panels, each with 270 Watts of power, for a 10.8 kilowatt system. A summary of Butch’s solar installation follows:

1. Butch would pay $38,000 to re-roof his home and install solar panels.
2. His Federal Tax Credit would reduce the installed cost by $10,200.
3. This brings the net cost of his roof and solar panel installation down to $27,800
4. The total value of the solar energy generated over 30 years with 10.8 kW system is $61,400

This means the total financial benefits over the 30-year useful life of the standard solar panels on Butch’s newly installed roof is $33,600.

Butch lives in West Virginia, which has some of the lowest utility rates in the country. In other areas, the gap between the Tesla savings and standard solar panel savings will be even more dramatic. Compare Tesla’s Solar Roof against a variety of solar panel makes and models for your own home using the estimation tools on Geostellar.

Elon Musk: Iron Man or Confidence Man?

Because he has been so successful, and is clearly committed to addressing major issues facing humanity, Elon Musk, the founder and CEO of Tesla, typically gets a pass in the press when his ideas are off-target. In the case of the Tesla Solar Roof, this can be destructive to the solar industry, and set us back in the battle against climate change. As I reported in a previous column, Tesla can stall adoption of batteries and solar panels as people wait for a solution that Musk promises is “better,” when it’s not. Everything we need to solve the energy and climate crises are available today.

Brent Todarian, an actual urban planner who knows what he’s talking about, brilliantly countered Musk’s recent TED talk on the “Boring Company”, an effort Musk appears to be spearheading to tunnel under cities and alleviate traffic congestion. Musk is clearly passionate about transportation, given the Tesla electric cars, Hyperloop and the Boring Company. Let’s hope Musk focuses on the development of the electric jet, which he pitched to Tony Stark in his Iron Man cameo.

Solar is, and must remain, a truly boring industry to compete with legacy power on a kilowatt hour basis. Musk’s pitch for the Tesla Solar Roof is less evocative of a Tony Stark than Lyle Lanley from “Marge vs. the Monorail,” a Simpsons episode based on The Music Man.

I’ll look forward to reading the hot takes late next year when the Tesla Solar Roof is declared as dead as the gold Apple Watch Edition.