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Reading the Tesla tea leaves

The future of Tesla’s solar roof tiles is murky and uncertain


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March 13, 2018 by John Bleasby

Maybe they will change the way we live in our homes. Maybe they’ll find their way to the scrap heap of history. Any way you look at it though, Elon Musk and his Tesla solar roof tiles have enjoyed free publicity unlike any other environmental product.

Give Elon Musk credit for innovation. However, the financial status of his company is as concerning as the future of small scale residential solar.

You’ve seen the press releases. You’ve been told how Telsa tiles will revolutionize the world of residential solar by simply looking like any other roof material when viewed from the street — apparently  curb appeal is all that it will take for homes around the world to go solar. Yet, the response has been amazing. Thousands of homeowners have slapped down deposits for Tesla solar roof tiles, even though most will not see delivery for a year or more. It’s going to get even more hectic as Home Depot and Lowes will soon start offering Tesla solar tiles and PowerWall storage battery systems for sale in kiosks at  hundreds of outlets across the USA. (There are no such plans for Canada.)

The salad days for Canadian residential solar are past
The financial viability of small scale residential solar in Canada has changed dramatically. As covered both in print and on-line by Canadian Contractor, the rooftop PV array solar industry has been slip-streaming behind a truckload of government subsidies for a decade, either installation grants or over-the-top power purchase agreements. Those days are over. Today, if a homeowner wants a PV array system installed on the roof, it’s out of  concern for the environment and their personal carbon footprint, not for financial payback.

A niche within a niche
PV arrays on a home’s rooftop are expensive. As government subsidies peter out, it’s becoming a niche market in Canada. Tesla takes this even further. At roughly triple the installed cost of a standard array, Tesla is a niche within a niche. Coupled with a solar photon conversion efficiency of perhaps only 70 per cent of standard arrays, one is left scratching one’s head.

Tesla has been burning through cash at an unsustainable rate

The solar slump is in the USA too
It’s not just Canada. According to the Buffalo News, “The nationwide [USA] residential solar market is expected to shrink by 13 percent this year – the first-ever decline in the rooftop solar market… Most of the decline is because of Tesla. Through the first three quarters of this year alone, Tesla’s total installations – which include an undisclosed number of commercial projects – were down by 32 percent, or 208 megawatts. That doesn’t include what is likely to be a substantial decline in its fourth quarter deployments. Its share of the residential solar market has shrunk from 35 percent in 2015 to 14 percent during the third quarter, according to Reuters.”

Can Tesla even survive in the future?
However, there’s more the story than that. What you are not maybe hearing is the serious issue of financial viability of both the product itself and the company behind it. One big question is: Can Tesla survive as a company survive? Don’t take our word for it. Here are observations from a sampling of news and industry media following the Tesla story.

From forbes.com
“One commentator has gone so far as to call Tesla “structurally bankrupt.” By this, he means that the firm’s operations are not self-sustaining and that it is unable to function as a going concern without access to capital markets” (see chart)

From madison.com
“Oh, how the mighty have fallen… According to the recently released fourth-quarter results, Tesla only installed 87 MW of solar, an astonishing decline … and another sign that solar may be slowly dying at Tesla…. Overshadowing the decline in solar is Tesla’s production problems with the Model 3 [electric car]. The product has been delayed by at least two quarters, and if delays continue it won’t matter what happens in the solar business because Tesla will burn through billions in cash.”

From the New York Times
“This summer, Tesla’s stock-market valuation at times rose above those of Ford and General Motors, and its worth exceeded $60 billion. It did not seem to matter to investors that the company had never made an annual profit, had missed its production targets repeatedly and had become enmeshed in controversy over its self-driving ‘autopilot’ technologies…”

From investorplace.com
“Since its inception, Tesla has burned cash in a rush to bring its creations to market. The company now faces a cash crunch that will force TSLA to raise capital sometime in 2018. Analysts rate Tesla’s bonds as having junk status, which makes issuing more of them a less appealing prospect.”

Competitive products are on the way
From architectureand design.com
“A solar roof tile offering from an emerging Australian company is setting high performance goals for a similar product recently launched by international giant Tesla. Tractile solar roof tiles from Trac Group Holdings … compare very favourably on several aspects including product features, versatility, performance and pricing. According to Trac Group managing director Jason Perkins, when the two products are compared, the Tesla products are simply left in the shade… on several aspects from the price of the roof, the weight of the roof, roof area requirement and the amount of electricity…”

From pv.tech.org
“US-based PV installer RGS Energy has struck an exclusive deal with Dow Chemical to exclusively sell its third generation (3.0) solar shingles under the ‘POWERHOUSE’ brand said to use conventional crystalline silicon solar cells rather than the original CIGS (Copper, Indium, Gallium, Selenide) thin-film substrates.”

From pvbuzz.com
“Hanergy has launched its version of the solar-embedded roof tile. Hanergy Thin Film Power Group Ltd is a Chinese multinational clean energy company. The company claims to be the world’s leading thin-film solar power company committed to changing the world using thin-film solar.”

This story risks evolving into a discouraging narrative. Here at Canadian Contractor we’ll likely leave it alone for a while and will simply wait until the final death notices arrive.

Got feedback? Make your opinion count by using the comment section below,
or by sending an email to:
JBleasby@canadiancontractor.ca

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3 Comments » for Reading the Tesla tea leaves
  1. Mark Saunders says:

    “Today, if a homeowner wants a PV array system installed on the roof, it’s out of concern for the environment and their personal carbon footprint, not for financial payback.”

    This is categorically false.

    • Solar Dad says:

      Hello Mark,

      Well – I agree & disagree with your opinion. Given that the solar electric systems are much less lucrative now than they were even last year (now that the FIT program is over in Ontario), one might think that people are buying solar electric systems for other reasons. The reality is that solar companies are still telling & selling solar electric systems as making lots of money. It’s their “alternative truth”. So people are buying them for financial reasons – based upon misrepresentation and manipulation of a solar system’s performance & benefits. It’s not that they don’t work – it’s that they don’t work as well as people are lead to believe…
      Having said all that, now that the FIT program is over in Ontario, there are better odds that a person buying a solar electric system is doing it for reasons other than just making money. Those reasons may include; energy security, – security from power outages and also large increases in cost; energy independence – thumbing the nose at the hydro utility, or belief in an end-of-days cataclysm; and those who are concerned for the environment and reducing their environmental footprint (not carbon footprint in Ontario because 90+% of Ontario’s electrical generation is carbon free).
      Regardless of the motivation, the solar industry in Ontario is in steep decline and will go back to being a small cottage industry. No political party will back alternative energy in a meaningful way for at least 5 years, maybe longer. What is really needed is changes to the building code so that it mandates an alternative energy (probably solar) generation component in every new building – as has been done successfully in some jurisdictions in Europe.
      BTW – Ignore the howls of builders – they howl no matter what is done to improve the building world – they only willingly do stuff that gives them a lucrative financial payback…

  2. Solar Dad says:

    John, I have to take exception to your hyperbole: “the rooftop PV array solar industry has been slip-streaming behind a truckload of government subsidies for a decade, either installation grants or over-the-top power purchase agreements”.
    There has never -ever – been any “truckload of government subsidies” for residential solar systems in Ontario. I know because I’ve been in the business for 40 years.
    First, Ontario is the only province to have offered a significant program – for 8 years – for roof top PV until Alberta started one late last year. Ontario’s program provided NO SUBSIDIES OR GRANTS – buyers paid ALL of the capital costs & taxes. They did get to sell the solar electricity generated back to Ontario Hydro for a very high rate the first year of the program. That rate was reduced for subsequent installations as the cost of solar systems declined, every year until the program ended last year.
    Residential solar PV systems make up a fraction of the total amount of PV that was installed – the majority was installed for commercial and industrial projects hundreds to thousands of times larger. Also note that the FIT program include industrial-sized wind generators that were paid much less per Kilowatt hour. The total installed generation capacity of wind generators is also several times larger than the solar capacity installed.
    Despite all of the monies spent & promised for wind & solar the costs of this power have had very little effect upon the actual cost of electricity in the province – contrary to all of the HYPE shouted out there. The rising costs are due to the need to modernize a failing transmission network, to fix failing nuclear reactors, and to pay private generators – using nuclear and the new natural gas generators – a guaranteed amount for the power they CAN generate – not just for what they actually deliver to the electrical grid!
    Solar Electricity in Ontario is dying because our electricity is still too cheap to make it cost effective. Solar Thermal (heating) in Ontario is dying because natural gas has become cheaper than in was ten years ago – and shows no prospect of rising in cost anytime soon. People in Ontario are dying because the environment is deteriorating because people don’t want to spend any money to help change/save the future…. Let someone else do it…..