Tesla Solar Roof or Solar CEDIF?
Tesla has just launched its beautiful Solar Roof and although it's currently only available in the US, they're promising it will be available outside the US sometime next year. So, what does it cost for a typical roof and how does that compare to a regular solar installation you can get today through Nova Solar Capital's CEDIF?
The Numbers on the Tesla Solar Roof
You can go to Tesla's website and enter the address of your property (US only), the floor area and the number of storeys. With this data, the website identifies your roof area, latitude, the local weather conditions, and the orientation of your roof. It assumes conservative estimates on loss of useful roof space to obstacles (chimneys, skylights etc), and uses local power rates and an annual power cost escalation rate to calculate the amount of generation from solar tiles and the annual cost of power saved. From the roof area and the proportion of solar and non-solar tiles, it calculates the cost of the roof. The difference between the cost of the roof and the power saved is the savings to the homeowner. The default settings include a Powerwall battery backup but this can be unselected to have just a standard grid-tied system, and the US investment tax credit is also included but is given as a separate number so it can be excluded as we don't have investment tax credits on solar PV in Canada.
As the Solar Roof isn't yet available in Canada, a house in Bangor was evaluated to make a comparison with Nova Scotia. Bangor is the same latitude as Halifax but more comparable to the Annapolis Valley for annual hours of sunlight. The 2-storey house evaluated has a south facing roof clear of obstructions and trees. The footprint of the house is about 30' x 37' with a 12/12 (45 degree) pitched roof. The total floor area of the house is about 2,200 sq ft.
This data was put into the Solar Roof Calculator and it estimated that 70% of the roof could be covered with the solar tiles, with the rest being non-solar. The calculator says the cost of the roof is $46,100 and the value of energy produced over 30 years based on escalating the current electricity price of 16.02¢/kWh by 2% per year is $52,600 - all US dollars. We can calculate back to the implied annual output of the solar to produce this value of electricity and it is about 8,700kWh per year. At Nova Solar Capital we have evaluated this roof for solar and found that the maximum potential output is 12,100kWh so 8,700kWh is about 30% less than our estimate of the roof's potential.
Tesla says this roof would qualify for a tax credit of $12,400. The benefit of the power savings over 30 years ($52,600) over the cost of the roof ($46,100) is a net $6,500 giving total benefit of $18,900 with the tax credit. In Canada we don't get the tax credit, so on this calculation the benefit would be US$6,500.
There are a couple of fairly large flaws in Tesla's analysis. The first is that Tesla's calculations seem only to be for the south-facing half of the roof and as aesthetics are the main reason for using the Tesla Solar Roof, customers would certainly want to cover the other side of the roof with non-solar tiles. Using a bit of math, we can work out that the extra cost for this house in Bangor is $15,500 so the total cost would be $61,600 which is $9,000 more than the 30 year power generation.
The other flaw is that Tesla's calculation ignores the time cost of money (interest). If interest rates are 10%, depositing $100 today at 10% interest rate will become worth $110 in a year's time. By analogy, receiving $110 in savings in a year's time is worth just $100 to us in value today. So, $52,600 of power savings over the next 30 years is worth a lot less than $52,600 in value today; the value today, assuming 3% interest rate, is just $33,265 - even when taking into account the escalating cost of power. So, in reality, buying this Tesla roof loses the buyer $15,935 over its lifetime ($61,600 - $33,265 - $12,400 = $15,935) $US. We can do a similar analysis for a Nova Scotia buyer by translating the US roof cost into Canadian dollars and using NS Power's current power tariffs of 15.063¢/kWh and removing the tax credit. The roof cost at current exchange rates would be $85,000 and the value today of the power savings would be $31,300 giving a net loss of $53,700 because the roof cost is far greater than the power savings.
The Tesla Solar Roof is good for 30 years whereas asphalt shingles only last for about 15 years. A regular solar panel installation protects the underlying shingles so a roof in good shape with solar should be good for 30 years. The other side of the roof would need re-shingling twice over the life of the Tesla Solar Roof's lifespan, at a total cost of, say, $6,000, bringing the Solar Roof's cost down to about $47,700 for a Canadian customer. Bear in mind, that the Tesla Solar Roof only replaces 70% of your energy requirement: you would still have to buy 30% from the electric utility.
So, what do we say about Tesla's Solar Roof? It's a great product; the aesthetics are wonderful and it's surely the route solar PV has to follow. But don't buy it because of the economics as it is unlikely to pay for itself in its lifetime, buy it because you want renewable energy and it's beautiful.
The solar CEDIF: If you're serious about saving money with solar
Nova Solar Capital is promoting a solar CEDIF which helps people offset the financing of a solar installation on their home with equity tax credits worth 65% of the investment. The credits are 35% in the first year, 20% in year 5 and 10% in year 10. We would install a 9kW system for a cost of $30,000 on the house in Bangor if it were located in Nova Scotia, generating power of 11,000kWh per year and, unlike the Tesla roof, supplying the customer's entire electricity needs. The equity tax credits for this installation would total $19,500, bringing the net capital cost to just $10,500. Applying NS Power's current tariff of 15.063¢/kWh escalated at 2% per annum, the value today of the power savings and the 10 years' tax credits are respectively $39,300 and $18,600 (total $57,900) giving a net profit to the homeowner of $27,900 in value today on the $30,000 system cost. Furthermore, the investment can be funded from homeowners' own RRSP accounts, so no need to borrow from a bank. This net profit compares to a net loss of Tesla's Solar Roof for a Canadian buyer of $47,700 plus the value today of the 30% of power bought from NS Power which is $11,800. Buying an installation through the CEDIF gives value today profit of $27,000 compared to value today loss of $59,500 for the Tesla Solar Roof. A buyer would be $86,500 better off buying their solar through the CEDIF.
2% annual increase in power costs is very conservative for NS Power rates, which have increased on average over 5% per year for the last decade, and with carbon pricing and power from the beleaguered Muskrat Falls project (currently running 90% over budget) there are prospects for substantial further increases in the pipeline. If we assume power rate increases of 4% annually over the next 30 years, the value today of the power savings and 10 years' of tax credits is $69,000 giving a net profit to the homeowner of $39,000 in value today.
For those concerned about aesthetics of solar on their house, an installation can be ground-mounted, perhaps in a less visible area of the back yard. A ground-mount for the 9kW system costs approximately $6,500 and can be funded through the CEDIF qualifying for the same 65% equity tax credits as the solar installation.
The close date for our solar CEDIF was recently extended to July 10th. Interested parties should contact us by mid-June at the latest.