Tesla's Solar Roof Tiles www.tesla.com

Scaling Seemingly Unscalable Peaks: Tesla's Solar Roof

Tesla is promoting off-grid reliability by offering Solar Roof as an integrated system with the Powerwall home battery.

On May 10, 2017, Elon Musk announced the availability of solar roof tiles, which can be ordered directly on the Solar Roof section of Tesla’s website. Tesla’s announcement carried with it much of the bravado we have come to expect from Elon Musk.

It is worthwhile, after a quick background, to look at the points of debate that have come to the fore, versus the positive momentum Tesla’s move is likely to be creating in the marketplace.

Background on Solar Roof

Solar Roof is based on a product line from Solar City, which Tesla acquired for $2 billion in 2016. The Solar Roof tiles are durable, aesthetically appealing tiles that have solar PV integrated into the tile itself. They are available in four styles that span a wide range of architectural styles. Tesla has enabled flexibility in roof design so the homeowner can chose which portion of the roof will convert sunlight into electricity. This feature is made possible by using two types of glass tile, solar and non-solar, both of which appear the same from street level. The tiles are warrantied for the lifetime of the house.

Tesla promotes “off-grid reliability” by offering Solar Roof as an integrated system, with the Tesla Powerwall home battery, “allowing you to use solar energy whenever you choose and providing uninterrupted electricity during grid outages.”

Tesla’s online tools help prospective purchasers estimate the value of energy their Solar Roof is expected to produce over 30 years based on location, and also estimates total cost of installation, including the removal of the homeowner’s old roof (while excluding taxes, permit fees and additional construction costs such as significant structural upgrades, gutter replacement or skylight replacements).

Tesla plans to have installations start in June, beginning with California and “rolling out to additional markets over time.” Homeowners can place their Solar Roof orders by completing an order form and making a $1000 payment. And Tesla claims it has designed Powerwall and Solar Roof “to integrate seamlessly with each other” and allows buyers to place orders for their Powerwall on the same form as the Solar Roof.

Points of Debate

In response to Musk’s announcement, naysayers have pointed out that some of the claims on Tesla’s website regarding the off-grid reliability, and/or the dollar value of the energy produced by the Solar Roof, involve assumptions which could have reasonable been modelled differently, yielding less favorable economic results.

For example, while the combination of the Solar Roof with the Tesla Powerwall battery energy storage system could enable a homeowner in an ideal location (for example, in the desert with consistent sunshine) to have fairly reliable electric service, the results would not be as favorable in some other places in the U.S.

In “less-than-ideal” places, to design a system to run 100% off grid using only solar PV and battery storage, while maintaining as reliable of a level of electric service as your local U.S. electric utility provides, you would have to make the battery backup a lot larger than the solution Tesla is envisioning. Otherwise, your batteries couldn’t meet your electricity demand requirements during a week or two of cloudy weather.

Economic modelling questions have also been raised, concerning the inflating of value future energy production (at 2% per year) when valuing energy produced by the Solar Roof, while not necessarily discounting the present value of this energy so as to provide an apples to apples comparison. (In other words, one might want to compare what you would you have earned on your money over the life of your house, if you had not invested in the Solar Roof.)

While such debates are helpful, a lot of credit has to be given here to Tesla’s efforts and Musk’s positive, high expectations in the overall product positioning. Are the high expectations important as a marketing strategy, even in areas where unrealistic expectations may be involved?

Scaling “Unscalable” Peaks

With his announcement, Elon Musk made the following statements:  “It will be very difficult and it will take a long time, and there will be some stumbles along the way. But it's the only sensible vision of the future.”

Musk’s confidence, in the face of the types of comments described above from naysayers, reminds me of the very inspiring story of Nando Parrado, one of the principle members of the Peruvian soccer team whose plane crashed in the Andes in 1972. His experiences are memorialized in his book Miracle in the Andes. (He was portrayed by Ethan Hawke in the 1993 feature film Alive: Miracle in The Andes.)



Specifically, I am reminded of the following statement Parrado made in Miracle in the Andes: “If we had known anything about climbing, we'd have seen we were already doomed. Luckily, we knew nothing, and our ignorance provided our only chance.”

Parrado and his fellow climber thought the peak they had to climb was much lower than it actually was. Similarly, there is a perverse strength to be found in the apparent weaknesses associated with Elon Musk’s positive posture in the face of some of the big obstacles he faces.

Granted, “ignoring” the size of an obstacle, and being “ignorant” of it, are two different things.  But in either case, the question is whether Musk will end up being one of the many who failed to scale the peak they were trying to climb, or be one of those who succeeds. ♦





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