
$0.55 per watt from SolarCity’s new solar panel - ck2
http://www.extremetech.com/extreme/215555-0-55-per-watt-from-solarcitys-record-breaking-new-solar-panel
======
IkmoIkmo
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
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.

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diafygi
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...](https://www.greentechmedia.com/articles/read/Will-There-Be-a-PV-
Module-Supply-Shortage-By-the-End-of-2015)

[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!

~~~
discardorama
> 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.

~~~
diafygi
There's a nice pretty chart on the DOE's soft costs website.

[http://energy.gov/eere/sunshot/reducing-non-hardware-
costs](http://energy.gov/eere/sunshot/reducing-non-hardware-costs)

It's from 2010, so stuff has shifted since then, but ~50% soft costs, 15%
installation labor, 15% non-module hardware, and 20% module. The DOE's really
been focused on soft costs (customer acquisition, overhead, engineering,
financing, etc.). We recently got a big grant to drive down the cost of
getting a customer's bill/usage history for the initial quote, which can
impact the overall cost by 5-10%.

~~~
pkaye
Wow these soft costs seem so huge. I was hoping technological innovation would
bring down the overall cost of solar but now it looks like that accounts for
only 1/3 of the costs. I hope the soft costs can be brought down significantly
over time.

~~~
drited
There is scope for optimism as the Germans are much more efficient on soft
costs. Several studies have looked at why the gulf exists between U.S and
German costs so people are focused on narrowing the gap. I think it'll happen,
maybe from late 2016 when the industry gets super competitive for business as
demand drops due to the Itc expiry.

------
kirk21
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.

------
dogma1138
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
A year from now for that price is okay considering federal subsidies will end
and you'll need that price to attract adoption.

~~~
dogma1138
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.

------
jnevill
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
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.

~~~
ghaff
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
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/lowes...](http://www.freecleansolar.com/v/vspfiles/assets/images/lowest-
cost-solar-panel-installation.gif)

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 :)

~~~
ghaff
Thanks for all the info! In a way though, that's my issue from a consumer
perspective. There's some risk--because there's always risk whether company
bankruptcy or whatever. And there's enough complexity in the transaction that
my default inclination is just to pass rather than to enter into a deal that I
don't completely understand all the subtleties of.

------
Bud
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
We changed the title from "Elon Musk‘s SolarCity announces new $0.55 per watt
solar panel".

