We are still of the opinion that there is a lot of money to be made by the company that nails a solar-plus-storage smart-home offering, sold as a service and installed professionally. The cost of such an offering makes it rather prohibitive as an upfront purchase, but the service model means that savings in electricity could be put towards the repayments or subscription fee. To this end, news from Smart Energy and Tesla show that the industry has taken another step towards such an offering.
Smart Energy is a small Australian outfit that has had success with a sales model that lets customers pay for the complete installation using the savings that it generates. It is the most popular approach among its customers, and in Australia, this equates to around a five-year payback period, after which, the customers own the panels outright.
This is much quicker than most offerings in Europe and North America, where finance packages are typically measure in double-figures. This is partly due to the cost of electricity in Australia being relatively more expensive – around $0.24 USD per KWh in Australia, compared to around $0.11 USD per KWh in the US.
For Smart Energy though, this is an easy was to increase its number of potential customers. If the scenario is accurate, the customer is essentially paying their electricity bill to Simple Energy, rather than to the utility, and if this is the case, then the criteria for offering this sort of package is simply anyone who can routinely pay and electricity bill.
Given that electricity is an essential household expense, this offering could prove a very safe bet for companies like Simple Energy, and open up the market to customers that might be declined a conventional finance package due to a poor credit rating, or to those that simply don’t have the cash to pay for the system all in one go.
Head Northeast from Smart Energy, across the Pacific Ocean, and you’ll eventually reach the US, where Tesla has just relaunched its solar division and announced a plan to rent rooftop solar panels to customers in six states. Starting at a price of $50 per month for a 3.8 KW system, the deal is going to be available in Arizona, California, and New Mexico, where there are ideal solar locations, and Connecticut, Massachusetts, and New Jersey, where state regulations are favorable.
Announced in typical Tesla fashion, the tweet from Musk said that it was still better to buy a system outright, but that ‘the rental option makes the economics obvious.’ For customer, the bet is that the electricity saved by having your own generation capacity is more than the rental cost of the panel.
Also in typical launch-fashion, details were somewhat light. There is an online portal for people to use to sign up, with three configurations of panels – 3.8 KW, 7.6 KW, and 11.4 KW. To sign up costs $100, but there is not a long-term contract, nor an installation fee.
However, there is a $1,500 removal fee, so customers are going to have to work out when it makes financial sense to remove the panels – although why one would want to remove them if they are still making money is not particularly clear. Technically, there’s no cancellation fee, but we think you’ll agree that the removal fee more than makes up for that – unless you particularly want to leave the inactive panels up there on your roof.
Musk likened the offer to “having a money printer on your roof if you live in a state with high electricity costs,” which is exactly the sort of phrasing that helps distract from the ongoing lack of the Solar Roof tiling option, as well as the question of why the Powerwall battery is not currently part of a rental package. Customers can purchase one of the batteries and have it installed at the same time, but that’s an upfront purchase for the time being.
Similarly, the comments will move to distract from a lot of other details that are worth knowing, such as whether the panels are transferable should a person move house, are these fees guaranteed for the life of the panels or could they rise in future, how long does a customer need to pay until Tesla starts making a profit on the venture, at what point should the customer be financing these instead of renting them, etc.
But Tesla has a habit of being scant on the details at launch. It remains a major (if diminished) player in solar, and utterly dominant in EV sales, but it has yet to crack the mass-market combination of solar, storage, and EV, tied together in one monthly package.
Smart Energy is a three-year old firm, founded in Byron Bay. It has 11 offices in Australia now, and one in the UK, and has plans for a New Zealand and a US location too. It says that its most popular products are QCELLS panels and Fronius inverters, and that it is Tesla-certified and offers Tesla storage systems too. It is focused on using top-quality installation teams, to ensure it leaves customers happy, as well as being stable enough to stay in business independently of government rebates.