5 ms·

$0.55 per watt from SolarCity’s new solar panel

89 points by ck2 11y ago

Bud 11y ago
Headline was rewritten, apparently. If you're going to do that, could you at least not put a backquote in Musk's name? Because that hurts my brain. :)
- dang 11y ago
  We changed the title from "Elon Musk‘s SolarCity announces new $0.55 per watt solar panel".
dogma1138 11y ago
If this is for an installed price this is a huge deal, if it's just for the panel cost it's well meh considering that they are 1-2 years away from production at this point.
- ck2 11y ago
  A year from now for that price is okay considering federal subsidies will end and you'll need that price to attract adoption.
  - dogma1138 11y ago
    Ok at best, not revolutionary or extraordinary, there are other panel companies with panels in the same price range even now if you want to buy "cheap" panels from China you can get as low as 0.3-0.4$ per watt. For most house installations the panel costs aren't the big deal, the installation and the electrical setup cost more than the panels, and it's really not clear from the article if this is included in the price. The labor costs, mounting frames, battery/capacitor bank, inverter and all the wiring cost a small fortune, if you want to hook it to the grid for offload you'll end up paying even more because then you need to tick quite a few additional regulatory boxes. So while I'm sure that these are going to be great panels, and 55 cents per watt for the panel it self isn't a bad price it's not going to be amazing, and this isn't even much beyond the current status of the market if you count in panels in general, for a US made panel that's going to be "revolutionary" for sure but again that should't really give it any substantial merit. But on the other hand of this is an overall price for a turn-key system this is a huge deal because this is in the orders of magnitude cheaper than the current turn-key price for an installation, which is what makes me think this is the panel price only.
- IkmoIkmo 11y ago
  Obviously it's just the panels, cost for installing are closer to $3-$5 for residential, and dropping below $2 for utility-scale solar iirc. If the total costs were actually $0.55 it'd be frontpage news the world over as it'd mean that utility solar would probably be more like 30c per watt, or $300 per kw. Now consider that the capacity factor is about 15% for solar, that means that 1kw of installed capacity generates about 3.6 kwh per day, or at 13c (US average) residential electricity prices, about half a dollar a day. That means for a $300 investment you'd stand to save about $170 a year. Little could compete with that, especially once you add in the incentives. Remember there's an immediate 30% tax credit, meaning if you spend $300 on a kwh, your taxes are reduced by $100. So now you're paying $200. Further, you can depreciate your solar in like 6 years, meaning in about a quarter of the lifespan of your solar installation you can reap $300 in depreciation, which you can subtract from your taxable income. So if your effective tax rate is say 30%, then 300 fewer taxed dollars saves you another $100. So now you're at $100 invested for a $170 annual return. And don't forget, you're not just generating energy, you're generating green energy which is certifiable and can be sold as SRECs on the market, which increases your revenue further. Every business in the US would go solar tomorrow and half the coal industry would go bankrupt overnight with more to follow if we saw prices that low suddenly! Anyway so the prices are closer to 8-10x as much, the figure cited is just the panel cost. It's still pretty nice but it's just an iteration of solar tech like every other that is offset by subsidies dwindling in a staggered design.
jnevill 11y ago
I wish they sold their panels outright. I could use a few 100 watt panels at 55 bucks a shot. Even double that price, this would be a steal.
- billiam 11y ago
  they won't sell their panels outright because they are not trying to make money from manufacturing panels, but from providing the service (and the monitoring) to install and use them. That is Solar City's business, and they make lot of money doing it. These panels are about as efficient as others, and the installed cost is still a good bit higher. Not a game changer at all.
  - caio1982 11y ago
    In that case, I wish they would make money providing service in other countries too.
  - ghaff 11y ago
    As someone with a passing interest in solar although it's not at all clear to me how the economics would work out, I've found taking a look at SolarCity pretty frustrating. I get that every installation is different but any attempt to probe below the marketing buzz requires a phone number which sets me up to expect high-pressure sales tactics. Indeed, my experience is that there's a lot of aggressive solar selling going on in advance of tailing off subsidies.
    - IkmoIkmo 11y ago
      It looks a little bit like this. Their panel costs are say $1, the other costs (construction team, scaffolding, permitting, inverter etc) are say $4. These are rough numbers, per watt. You actually lease it from them, so you don't own the installation. You either 1) rent the panels, or 2) buy the electricity from the panels. Either way they try to offer you a rate of your current utility - 5% or whatever. Basically it becomes slightly cheaper most of the time, but not by much, locks you into a 20 year contract, and you get the intangible emotional/moral benefit of 'going green'. That's their value offering. This also means you have no installation risk, if the panels break it's their problem, not yours, so things like guarantees on equipment or who has to pay for repairs isn't as big of an issue. Alright so as they own the stuff, they get all the subsidies. For one there's a 30% tax credit. Say you install $300 of solar, you can reduce your payable taxes by $100, so the effective cost is $200 by now. Then either the $300, or on the remainder ($200), can't recall, you can depreciate in a few years. Say it's the full amount, and your effective tax rate is 30%, you can now reduce your taxable income by $300, of which you save 30% or another $100. Then you can sell the SRECs, after all you generate green energy which is certifiable in solar credits and can be sold to polluting companies. Prices vary but you could get say $50 on a $300 installation for example. So now you've reduced your effective costs to $1 out of every $6 you spent. Alright so how much does $5 per watt generate in electricity income? Well most of it goes to the user who pays you a market rate - 5%. So ignore the 5% for a moment, the US average is about 13c per kwh. A typical capacity factor for solar is about 15%, so over a 365 day period you can generate 1314 watt per installed watt of capacity, or 1.3 kwh, valued at a little over 17 cents, take off the 5% and you're left with about 16c rounded down, let's say. So for $5, you get a 16c return, but the $5 after all the above tax credits, depreciation and solar credits might be closer to say $1. So SolarCity could make about 16c on the dollar every year, for a 20y contract. That's roughly a 4% return or so. So now you have a 20 year cashflow contract with a customer, and you can go ahead and sell that on the market as a security with a 4% ROI. This way they can immediately cash out and be cashflow positive and reinvest the money into new installations. This allows them to scale much quicker than growing organically, and this scale gives them economies of scale, and the ability to buy up other companies, even their own manufacturing (as this article is really about) and beat the competition. In short, there's not a lot of solar technology going on, i.e. totally different from SpaceX or Tesla where there's real engineering innovation. It's mostly clever business models, securitisation of decentralised utility contracts (solar on rooftops) at locked in prices, heavy reliance on subsidies (a reliance which is decreasing every year as it's forced to do). Anyway above numbers are pretty rough but it gives a sense of the economics. It's a really tricky industry to get a hold of as people throw around (inc. myself sometimes) tons of numbers interchangeably. Like citing capacity in DC/AC makes a difference but is rarely specified. Specifying costs per watt as module costs, installation costs, total costs etc, is often left out. Ownership changes the economics completely for the different parties etc. Here you can see a chart for the total costs for some players in the space. Ignore the $3 one, it's their chart :p But you can get a sense of the rough numbers: http://www.freecleansolar.com/v/vspfiles/assets/images/lowest-cost-solar-panel-installation.gif http://www.freecleansolar.com/v/vspfiles/assets/images/lowes... The SREC market differs wildly from state to state, hard to put a value on it. Federal subsidies of 30% are phased by 2016's year-end. The depreciation of a solar installation might be a business-only thing and not applicable to consumer-owned solar (which SC doesn't do anyway), I'm not fully familiar with US fiscal policy as a European. Anyway that's the best I can do right now, hope that helps :)
diafygi 11y ago
I work in solar, and this is fantastic news...for SolarCity. There's expected to be a solar panel shortage coming soon because the industry is growing so fast[1], so if you don't make your own panels, you can expect panel prices to go up. The fact that SolarCity can make its own modules, means it won't be affected by the shortage nearly as much as others. Anyway, just to give some perspective, solar panel cost accounts for ~20% of the overall installed cost in the U.S.[2]. So reducing panel prices by this incremental cost doesn't impact the overall cost as much as you'd think. However, every little bit helps, and this definitely keeps the industry on track to meet the Department of Energy's goal of $0.06/kWh by 2020[3]. There's a lot of other players that are focused on driving down other parts of installed costs (soft costs are a huge part, for example), and we're really seeing all these efforts pay off in exponential adoption of solar. [1]: https://www.greentechmedia.com/articles/read/Will-There-Be-a-PV-Module-Supply-Shortage-By-the-End-of-2015 https://www.greentechmedia.com/articles/read/Will-There-Be-a... [2]: http://energy.gov/eere/sunshot/soft-costs http://energy.gov/eere/sunshot/soft-costs [3]: http://energy.gov/eere/sunshot/about http://energy.gov/eere/sunshot/about P.S. Obligatory "we're hiring". If you know python, the solar industry is tons of fun!
- Retric 11y ago
  20% of Rooftop solar costs, grid connected solar has far lower overhead.
  - diafygi 11y ago
    Yep, sorry, SolarCity is mostly residential and commercial, so the cost breakdown is based on their sector.
- discardorama 11y ago
  > solar panel cost accounts for ~20% of the overall installed cost in the U.S.[2]. So reducing panel prices by this incremental cost doesn't impact the overall cost as much as you'd think. So where does the other 80% of the cost come from? Maybe we should be figuring out how to cut that instead.
IkmoIkmo 11y ago
If anyone's wondering, SC's costs are above market average virtually everywhere, and they do not differentiate costs based on size (which is an immediate red flag for anyone concerned about costs, because it means they're averaging out fixed costs of small projects on larger projects instead of giving individual customers an individual price that's based on the individual costs + profit.) They're not a breakthrough solar company, there's very little technically that they actually do that's better than anyone else. They're a breakthrough business company in the solar industry by creating a scaleable organisation that cleverly securitises decentralised utilities, basically, that's different from Tesla or SpaceX where there's actual breakthrough engineering going on. It's done very well, it's hugely important and I'm glad they're a player in the space, but in terms of actual solar tech there's nothing novel going on here and they're usually not the best deal you can find (although it really depends on a lot of factors. Long-term non-bankruptcy is a big deal in a relatively young industry with many companies going bankrupt while dealing with products with a 20-year lifetime, and SC probably has some of the best odds of being around that long. That alone can be worth a premium to some people, at least in the solar lease business). Finally can we stop calling it Elon Musk's SolarCity, I like the guy as much as anyone and obviously he's a part of SC, but everyone knows that Lyndon Rive spends 100x as much of his time on this than Elon Musk and is the actual CEO running the place. The name Elon Musk isn't like Donald Trump, you don't need to headline it every time there's an association that's relatively minor, that's just clickbait, at least I don't think journalists should do that. He's on the board, he's not running the thing and he helped start it almost a decade ago.
- bhauer 11y ago
  SolarCity's pricing structure was a large deciding factor for me. I ended up using an independent installer to equip my small Los Angeles-area home with solar. I bought the panels and SolarCity's buy option was considerably more expensive. To your point about Elon Musk, as a fan of Tesla and SpaceX, I can tell you that at least the customer experience gulf between Tesla and SolarCity is notable. SolarCity is the kind of place where you are teased with $100 gift cards and other silly promotions. As a potential customer, you are juggled among a team of sales people who very aggressively chase the sale. Talking about things like a buy option is a bit "off script" for SolarCity and the answers to technical and contractual questions are vague. All that said, I too like that they are in the market, providing a mainstream option that appeals to a wide audience.
kirk21 11y ago
Really excited about this! In combination with Google's Project sunroof (https://www.google.com/get/sunroof#p=0 https://www.google.com/get/sunroof#p=0), this could it make it more straightforward to install solarpanels.

89 points by ck2 11y ago

Bud 11y ago

Headline was rewritten, apparently. If you're going to do that, could you at least not put a backquote in Musk's name? Because that hurts my brain. :)

dang 11y ago
We changed the title from "Elon Musk‘s SolarCity announces new $0.55 per watt solar panel".

dogma1138 11y ago

If this is for an installed price this is a huge deal, if it's just for the panel cost it's well meh considering that they are 1-2 years away from production at this point.

ck2 11y ago
A year from now for that price is okay considering federal subsidies will end and you'll need that price to attract adoption.
- dogma1138 11y ago
  Ok at best, not revolutionary or extraordinary, there are other panel companies with panels in the same price range even now if you want to buy "cheap" panels from China you can get as low as 0.3-0.4$ per watt. For most house installations the panel costs aren't the big deal, the installation and the electrical setup cost more than the panels, and it's really not clear from the article if this is included in the price. The labor costs, mounting frames, battery/capacitor bank, inverter and all the wiring cost a small fortune, if you want to hook it to the grid for offload you'll end up paying even more because then you need to tick quite a few additional regulatory boxes. So while I'm sure that these are going to be great panels, and 55 cents per watt for the panel it self isn't a bad price it's not going to be amazing, and this isn't even much beyond the current status of the market if you count in panels in general, for a US made panel that's going to be "revolutionary" for sure but again that should't really give it any substantial merit. But on the other hand of this is an overall price for a turn-key system this is a huge deal because this is in the orders of magnitude cheaper than the current turn-key price for an installation, which is what makes me think this is the panel price only.
IkmoIkmo 11y ago
Obviously it's just the panels, cost for installing are closer to $3-$5 for residential, and dropping below $2 for utility-scale solar iirc. If the total costs were actually $0.55 it'd be frontpage news the world over as it'd mean that utility solar would probably be more like 30c per watt, or $300 per kw. Now consider that the capacity factor is about 15% for solar, that means that 1kw of installed capacity generates about 3.6 kwh per day, or at 13c (US average) residential electricity prices, about half a dollar a day. That means for a $300 investment you'd stand to save about $170 a year. Little could compete with that, especially once you add in the incentives. Remember there's an immediate 30% tax credit, meaning if you spend $300 on a kwh, your taxes are reduced by $100. So now you're paying $200. Further, you can depreciate your solar in like 6 years, meaning in about a quarter of the lifespan of your solar installation you can reap $300 in depreciation, which you can subtract from your taxable income. So if your effective tax rate is say 30%, then 300 fewer taxed dollars saves you another $100. So now you're at $100 invested for a $170 annual return. And don't forget, you're not just generating energy, you're generating green energy which is certifiable and can be sold as SRECs on the market, which increases your revenue further. Every business in the US would go solar tomorrow and half the coal industry would go bankrupt overnight with more to follow if we saw prices that low suddenly! Anyway so the prices are closer to 8-10x as much, the figure cited is just the panel cost. It's still pretty nice but it's just an iteration of solar tech like every other that is offset by subsidies dwindling in a staggered design.

jnevill 11y ago

I wish they sold their panels outright. I could use a few 100 watt panels at 55 bucks a shot. Even double that price, this would be a steal.

billiam 11y ago
they won't sell their panels outright because they are not trying to make money from manufacturing panels, but from providing the service (and the monitoring) to install and use them. That is Solar City's business, and they make lot of money doing it. These panels are about as efficient as others, and the installed cost is still a good bit higher. Not a game changer at all.
- caio1982 11y ago
  In that case, I wish they would make money providing service in other countries too.
- ghaff 11y ago
  As someone with a passing interest in solar although it's not at all clear to me how the economics would work out, I've found taking a look at SolarCity pretty frustrating. I get that every installation is different but any attempt to probe below the marketing buzz requires a phone number which sets me up to expect high-pressure sales tactics. Indeed, my experience is that there's a lot of aggressive solar selling going on in advance of tailing off subsidies.
  - IkmoIkmo 11y ago
    It looks a little bit like this. Their panel costs are say $1, the other costs (construction team, scaffolding, permitting, inverter etc) are say $4. These are rough numbers, per watt. You actually lease it from them, so you don't own the installation. You either 1) rent the panels, or 2) buy the electricity from the panels. Either way they try to offer you a rate of your current utility - 5% or whatever. Basically it becomes slightly cheaper most of the time, but not by much, locks you into a 20 year contract, and you get the intangible emotional/moral benefit of 'going green'. That's their value offering. This also means you have no installation risk, if the panels break it's their problem, not yours, so things like guarantees on equipment or who has to pay for repairs isn't as big of an issue. Alright so as they own the stuff, they get all the subsidies. For one there's a 30% tax credit. Say you install $300 of solar, you can reduce your payable taxes by $100, so the effective cost is $200 by now. Then either the $300, or on the remainder ($200), can't recall, you can depreciate in a few years. Say it's the full amount, and your effective tax rate is 30%, you can now reduce your taxable income by $300, of which you save 30% or another $100. Then you can sell the SRECs, after all you generate green energy which is certifiable in solar credits and can be sold to polluting companies. Prices vary but you could get say $50 on a $300 installation for example. So now you've reduced your effective costs to $1 out of every $6 you spent. Alright so how much does $5 per watt generate in electricity income? Well most of it goes to the user who pays you a market rate - 5%. So ignore the 5% for a moment, the US average is about 13c per kwh. A typical capacity factor for solar is about 15%, so over a 365 day period you can generate 1314 watt per installed watt of capacity, or 1.3 kwh, valued at a little over 17 cents, take off the 5% and you're left with about 16c rounded down, let's say. So for $5, you get a 16c return, but the $5 after all the above tax credits, depreciation and solar credits might be closer to say $1. So SolarCity could make about 16c on the dollar every year, for a 20y contract. That's roughly a 4% return or so. So now you have a 20 year cashflow contract with a customer, and you can go ahead and sell that on the market as a security with a 4% ROI. This way they can immediately cash out and be cashflow positive and reinvest the money into new installations. This allows them to scale much quicker than growing organically, and this scale gives them economies of scale, and the ability to buy up other companies, even their own manufacturing (as this article is really about) and beat the competition. In short, there's not a lot of solar technology going on, i.e. totally different from SpaceX or Tesla where there's real engineering innovation. It's mostly clever business models, securitisation of decentralised utility contracts (solar on rooftops) at locked in prices, heavy reliance on subsidies (a reliance which is decreasing every year as it's forced to do). Anyway above numbers are pretty rough but it gives a sense of the economics. It's a really tricky industry to get a hold of as people throw around (inc. myself sometimes) tons of numbers interchangeably. Like citing capacity in DC/AC makes a difference but is rarely specified. Specifying costs per watt as module costs, installation costs, total costs etc, is often left out. Ownership changes the economics completely for the different parties etc. Here you can see a chart for the total costs for some players in the space. Ignore the $3 one, it's their chart :p But you can get a sense of the rough numbers: http://www.freecleansolar.com/v/vspfiles/assets/images/lowest-cost-solar-panel-installation.gif http://www.freecleansolar.com/v/vspfiles/assets/images/lowes... The SREC market differs wildly from state to state, hard to put a value on it. Federal subsidies of 30% are phased by 2016's year-end. The depreciation of a solar installation might be a business-only thing and not applicable to consumer-owned solar (which SC doesn't do anyway), I'm not fully familiar with US fiscal policy as a European. Anyway that's the best I can do right now, hope that helps :)

diafygi 11y ago

I work in solar, and this is fantastic news...for SolarCity. There's expected to be a solar panel shortage coming soon because the industry is growing so fast[1], so if you don't make your own panels, you can expect panel prices to go up. The fact that SolarCity can make its own modules, means it won't be affected by the shortage nearly as much as others. Anyway, just to give some perspective, solar panel cost accounts for ~20% of the overall installed cost in the U.S.[2]. So reducing panel prices by this incremental cost doesn't impact the overall cost as much as you'd think. However, every little bit helps, and this definitely keeps the industry on track to meet the Department of Energy's goal of $0.06/kWh by 2020[3]. There's a lot of other players that are focused on driving down other parts of installed costs (soft costs are a huge part, for example), and we're really seeing all these efforts pay off in exponential adoption of solar. [1]: https://www.greentechmedia.com/articles/read/Will-There-Be-a-PV-Module-Supply-Shortage-By-the-End-of-2015 https://www.greentechmedia.com/articles/read/Will-There-Be-a... [2]: http://energy.gov/eere/sunshot/soft-costs http://energy.gov/eere/sunshot/soft-costs [3]: http://energy.gov/eere/sunshot/about http://energy.gov/eere/sunshot/about P.S. Obligatory "we're hiring". If you know python, the solar industry is tons of fun!

Retric 11y ago
20% of Rooftop solar costs, grid connected solar has far lower overhead.
- diafygi 11y ago
  Yep, sorry, SolarCity is mostly residential and commercial, so the cost breakdown is based on their sector.
discardorama 11y ago
> solar panel cost accounts for ~20% of the overall installed cost in the U.S.[2]. So reducing panel prices by this incremental cost doesn't impact the overall cost as much as you'd think. So where does the other 80% of the cost come from? Maybe we should be figuring out how to cut that instead.

IkmoIkmo 11y ago

If anyone's wondering, SC's costs are above market average virtually everywhere, and they do not differentiate costs based on size (which is an immediate red flag for anyone concerned about costs, because it means they're averaging out fixed costs of small projects on larger projects instead of giving individual customers an individual price that's based on the individual costs + profit.) They're not a breakthrough solar company, there's very little technically that they actually do that's better than anyone else. They're a breakthrough business company in the solar industry by creating a scaleable organisation that cleverly securitises decentralised utilities, basically, that's different from Tesla or SpaceX where there's actual breakthrough engineering going on. It's done very well, it's hugely important and I'm glad they're a player in the space, but in terms of actual solar tech there's nothing novel going on here and they're usually not the best deal you can find (although it really depends on a lot of factors. Long-term non-bankruptcy is a big deal in a relatively young industry with many companies going bankrupt while dealing with products with a 20-year lifetime, and SC probably has some of the best odds of being around that long. That alone can be worth a premium to some people, at least in the solar lease business). Finally can we stop calling it Elon Musk's SolarCity, I like the guy as much as anyone and obviously he's a part of SC, but everyone knows that Lyndon Rive spends 100x as much of his time on this than Elon Musk and is the actual CEO running the place. The name Elon Musk isn't like Donald Trump, you don't need to headline it every time there's an association that's relatively minor, that's just clickbait, at least I don't think journalists should do that. He's on the board, he's not running the thing and he helped start it almost a decade ago.

bhauer 11y ago
SolarCity's pricing structure was a large deciding factor for me. I ended up using an independent installer to equip my small Los Angeles-area home with solar. I bought the panels and SolarCity's buy option was considerably more expensive. To your point about Elon Musk, as a fan of Tesla and SpaceX, I can tell you that at least the customer experience gulf between Tesla and SolarCity is notable. SolarCity is the kind of place where you are teased with $100 gift cards and other silly promotions. As a potential customer, you are juggled among a team of sales people who very aggressively chase the sale. Talking about things like a buy option is a bit "off script" for SolarCity and the answers to technical and contractual questions are vague. All that said, I too like that they are in the market, providing a mainstream option that appeals to a wide audience.

kirk21 11y ago

Really excited about this! In combination with Google's Project sunroof (https://www.google.com/get/sunroof#p=0 https://www.google.com/get/sunroof#p=0), this could it make it more straightforward to install solarpanels.