Everything you need to know about Tesla’s $1.07/watt commercial solar program
Individual panel prices
Prices of DIY kits
Installed system prices
On September 13, 2019, Tesla announced its new commercial solar program. The program, which is offered to California business owners, allows them to install solar for as little as $1.07 per watt. All you have to do is choose a system size and pay a $100 deposit, and you will be on track to powering your business with clean energy.
The program also includes the option for business owners to subscribe to solar, which is similar to Tesla’s residential rent solar program. For those who choose to subscribe to solar, there are no upfront installation costs and no long-term contracts. As part of the agreement, however, subscription holders forfeit their rights to all eligible tax credits, rebates, and solar renewable energy credits to Tesla.
This announcement comes only a few short weeks after Walmart announced a lawsuit against the company for fires caused by Tesla solar panels at several store locations.
Tesla is offering three commercial solar system sizes. The solar panel system size that is right for your commercial property depends on your energy needs and the size of your roof.
Tesla offers a sizing guide to help you pick which system is right for your business.
|System size||Price including federal tax credit||Price per watt including federal tax credit||Estimated value of generation per year|
|40 kW||$65,546||$1.64 / watt||$10,660 - $12,300|
|120 kW||$142,346||$1.19 / watt||$24,180 - $27,900|
|240 kW||$255,714||$1.07 / watt||$48,360 - $55,800|
If these prices seem low, it’s because they are.
Commercial solar, in general, is cheaper than residential solar because it costs less to deploy large installations. The average cost of commercial solar in the United States is $1.83 per watt (or $1.35 per watt after the federal tax credit).
Tesla is able to offer even lower commercial solar prices because they have streamlined the process for ordering solar by offering standard system sizes and having a simple online ordering form.
The simplicity of Tesla’s process has cut down on soft expenses that are associated with solar power systems, such as permitting costs and customer acquisition costs. In fact, Tesla CEO Elon Musk has said that ordering commercial solar is so simple, you can do it in 30 seconds.
Those who purchase a Tesla commercial solar system are able to take advantage of incentives on top of the federal tax credit. There are a variety of local incentives, like San Francisco's Solar Energy Incentive Program, which gives you $200 for each kW of commercial solar installed.
You can also take advantage of the federal modified accelerated cost recovery system (MACRS) incentive. MACRS allows business owners to recover investments on their solar systems through depreciation costs. This incentive has the potential to save business owners a significant amount of money.
Tesla solar panel and battery installation. Image source: Tesla
With lower prices and a quick ordering process, why wouldn’t you take advantage of Tesla’s commercial solar?
Tesla’s price per watt for commercial solar is extremely low. But for some business owners, these upfront costs could still be daunting. Tesla, as a way of addressing this issue, has debuted a new option for the companies who previously claimed solar wasn’t a viable option: solar subscriptions for commercial systems.
Similar to the residential rent solar program, Tesla will now allow commercial property owners to install solar panels on their roofs with no upfront installation costs or long-term contracts.
Instead, solar subscription holders will pay for each kilowatt hour (kWh) their solar system produces, which serves as a rent payment to Tesla. Powerwall, Tesla’s energy storage system, is not included in the subscription program, however, you can choose to purchase Powerwall separately.
The subscription rates are as follows:
|System size||Subscription rate|
|40 kW||$0.129 / kWh|
|120 kW||$0.109 / kWh|
|240 kW||$0.099 / kWh|
Tesla estimates a 40 kW system will produce a minimum of 4,330 kWh of solar energy per month. Purchasing 4,330 kWh of electricity at California’s average commercial electric rate would cost roughly $795.85.
Under the solar subscription program, a business owner would pay $558.57 for the same amount of energy. That saves about $237.28 per month on energy costs.
If a solar subscription holder loves their Tesla solar power system, they can choose to purchase it. The system can be bought at the fair market value, which takes into account the current system price, the system’s age, and the deterioration of the system.
Alternatively, if a subscription holder doesn’t love their Tesla solar panel system, they can opt to suspend their subscription and leave the panels on their roof for free or have the system removed for a fee. The fee is based on a time-and-materials rate for removal and includes removing the solar panels and repairing damages to the roof. The subscription agreement does not mention a warranty on the roof repairs completed by Tesla.
You may choose to have the solar system removed by a qualified electrical contractor instead of Tesla. If you wind up working with another contractor, you are responsible for any damages that may come up during the removal. The system then has to be returned to Tesla damage-free within 10 days.
Under the subscription program, Tesla owns the solar system. This means that incentives including the federal tax credit and MACRS are awarded to Tesla, not the business owner.
The commercial solar subscription program is also only available in California. You must be a customer of Pacific Gas and Electric Company or San Diego Gas and Electric in order to participate.
To qualify, you must own the building or have permission from the building owner to install solar. This program is for rooftop solar installations only, not ground-mounted systems.
It is important to note that the terms of the purchase agreement and the subscription agreement state that Tesla has the right to update the price of the system if the project requires Tesla to perform anything outside of their scope of work. Tesla can also decide that they will not build the system pending the site conditions.
Both of the commercial options offered by Tesla allow business owners to enjoy the benefits of solar. The solar subscription offers business owners flexibility and softens the financial burden that comes with upfront solar panel installation costs. It also allows for significant savings.
However, purchasing a solar panel system outright will save you even more money over the lifetime of the system.
Purchasing a system through Tesla makes the cost per watt so much cheaper than the national average for purchasing commercial systems. This means that buying a system through Tesla will provide more savings than if you had purchased a system from another company.
The tables below show the estimated long-term savings for entering into a solar subscription with Tesla versus buying a Tesla solar panel system.
|System Size||Annual Subscription Payment||Value Generated per Year||25 Year Savings (including subscription cost)|
|System Size||System Cost after Federal Tax Credit||Value Generated Per Year||25 Year Savings (including system cost)|
The “Value generated per year” is taken from the low-end of estimates provided by Tesla. Many factors such as operations and maintenance costs, rate inflation, module degradation, and the value from tax effects and incentives other than the federal tax credit are not taken into consideration. However, even if those factors were included, they would not substantially impact the results.
All in all, if you purchase a Tesla solar panel system, you will save twice as much money over the lifetime of the system as you would with a solar subscription. However, if you don’t plan on keeping your business in the same building for the long-term, a solar subscription could be right for you.
Both of Tesla's commercial solar power options allow you to save money on your electric bill and power your business with clean energy.
Are you a solar installer looking to grow your business in 2021? With the federal tax credit stepping down from 26% to 22% in 2023, before expiring completely in 2024, this is a great year to grow your sales organization and grab some additional market sh
Volkswagen is planning for an electric future with the new ID.4 and intends to expand battery manufacturing to help drive down the cost of electric cars.