Doing the Math on Tesla's Solar Roof (Again)

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Now that Tesla has announced detailed pricing for its Solar Roof, which the company started rolling out in August, potential customers can get an estimate on an installation using the company’s online calculator. If Tesla’s math is correct, it seems that in many cases the roof would more than pay for itself in electricity savings over the 30-year life of the warranty.

That sounds like a pretty good deal, but is it too good to be true? The answer is a complicated one, since Tesla’s calculator relies upon some important assumptions and predictions that delve deep into the economy of residential solar power in the U.S.

“It’s revolutionary in the sense of how they’re incorporating solar—the scale of it,” says David Sarkisian, a policy analyst at the North Carolina Clean Energy Technology Center, referring to the Solar Roof. “But it’s not like this suddenly changes everything about your decision on whether or not you should have solar at all. That’s still going to be informed by the same things you would look at for typical solar panels.”

Nonetheless, consumers have been quick to plunk down the $1,000 deposit, according to Tesla. The company says it's sold out of the product until early 2018.

How Tesla’s Calculator Works

Tesla eventually plans to offer four styles of tile, but currently, only two are available: smooth glass, for a contemporary look, and textured glass, which is designed to mimic the look of asphalt shingles. Each style of glass tile comes in both solar and non-solar tiles, which have different prices (the solar tiles produce energy, the non-solar tiles do not).

Tesla’s online cost calculator uses your address to determine the ratio of solar to non-solar tiles your house would need to get 100 percent of your energy from solar (the company told Consumer Reports that it doesn’t use your address for marketing purposes). The calculator deducts the upfront cost of the roof and the Powerwall battery from the cost of what you’d otherwise spend on energy over 30 years. That estimate is based on the price of electricity where you live, assuming a 2 percent increase in your utility bill each year.

The 30-year timeframe matches Tesla’s warranties both on power generation and weatherization (i.e., leaks resulting from installation) for the Solar Roof — the company claims that the tiles themselves are guaranteed for the life of your home.

Tesla’s calculator factors in a 30 percent Solar Investment Tax Credit, but not the incentives and credits that are available from various states and local utilities.

A financing option in the solar calculator uses the same ratio of solar to non-solar tiles and divides the cost, with interest, into payments over 30 years. It then compares those monthly payments to your hypothetical savings in electricity to calculate the net cost or savings per month when Solar Roof is financed.

If Tesla’s calculations are accurate, the Solar Roof may make sense for a hypothetical average house, but we wanted to see how the calculator priced a Solar Roof for real homeowners, so we put a few houses through it. Here’s what we found when we ran the numbers.

House One: New York

We plugged the address of a CR staffer whose house is located near our headquarters in Yonkers, N.Y. According to the tool, his three-story, 2,700-square-foot Gothic Revival would need approximately 1,175 square-feet of roofing, with a recommended ratio of 70 percent solar-producing tiles to 30 percent non-solar, along with one Powerwall.

Tesla’s calculator quoted a total upfront cost of $45,400 for the roof and Powerwall, and estimated that over 30 years, the system would save $46,800 in energy costs. The calculator also found that the system would qualify for $12,500 in federal Investment Tax Credits. If Tesla’s projections are accurate, a Solar Roof on this house should more than pay for itself within the warranty period, with a net savings of $13,900.

House Two: Texas*

The numbers came out very differently for a larger, more modern house in Texas when we ran it through Tesla’s calculator. The two-story 4,562-square-foot residence is located in a suburb of Houston, where the air conditioning might run 300 days per year.

Tesla estimated the homeowner would need 2,779 square feet of roofing, and suggested half solar and half non-solar tiles. The cost of the roof came in at $73,600, and the calculator recommended two Powerwalls, for an additional $12,500. The calculator anticipated that this homeowner would save $52,100 on electricity over 30 years, and receive $21,300 in tax credits. In this example, the homeowner would have a net cost — to the tune of $12,700.

House Three: California

We ran the same experiment on a 1,500-square-foot ranch house owned by our staffer's uncle in Thousand Oaks, Calif. The calculator estimated 1,878 square feet of roofing, with a recommended 50-50 split of solar to non-solar tiles.

At this address in sun-drenched California, the math appears to make a lot of sense: After the initial cost of $49,800 to install the roof and one Powerwall, Tesla estimates this homeowner would save $84,700 in energy costs over the next 30 years and receive $13,900 in tax credits. In this scenario, the net savings would be $41,800.

Because Tesla doesn’t factor in state and local incentives, the deals could potentially be even sweeter for some homeowners. New York state, for instance, has a 25 percent Solar Energy System Credit up to $5,000, which could further offset the cost of the system of our CR staffer.

It’s also worth looking into your state’s policy on net metering, which governs how much your utility pays you for any electricity your solar system feeds back to the grid. The rules surrounding net metering are incredibly complicated (you can read about the various state policies).

But according to Sarkisian at the North Carolina Clean Energy Technology Center, the upshot is that states with net metering policies typically require utilities to pay full rates for energy produced by residential solar arrays, while utilities in other states may only pay what’s known as an “avoided” rate, which is what the utility would pay to buy power from a bulk provider.

So in a state like California, which has a net metering policy, a Solar Roof customer could conceivably go without a Powerwall—Tesla suggests the device largely as a guarantee against power outages. While in Texas, a state with voluntary utility policies around net metering, Tesla recommends two Powerwalls in many installations to essentially create a closed-loop system.

Other Considerations

So the numbers vary wildly, but for some houses, the potential savings do seem to make a lot of sense—again, assuming Tesla’s projections are accurate. Nevertheless, you’ll want to consider a few other factors before you spend such a large chunk of money.

How Will You Cover the Hefty Upfront Costs? 
If you finance the project, obviously it will cost more due to interest. Even with today’s historically low rates, that would add significantly to the cost over 30 years. Alternatively, if you pay the total cost at the time of installation, you’re likely pulling money from savings or investments that could potentially be earning value. “You need to look at that as an investment, relative to other investments,” says Sarkisian.

How Long Do You Plan to Own Your Home?
Because Solar Roofs front-load the cost of electricity, the amount you stand to save or lose hinges heavily on how long you stay in your home. A typical owner of a single-family home will stay put for 13 years, according to the National Association of Homebuilders.

Using the example of our staffer’s home in New York, after paying $45,400 for the solar roof and Powerwall, he would save about $16,935 in electricity after 13 years. Even with that savings and $12,500 in federal tax credits, he’d still come out behind by $15,965 if he moved at this point. Some of that loss could be offset by potentially increased resale value, but it’s impossible to predict how much a Solar Roof will add to the value of a house.

How Much Sun Does Your House Get?
Got a lot of tall trees? A tall building next door? That can make a huge difference for the value of any solar array. You can plug in your address at Google’s Project Sunroof to see whether your roof is a good candidate for solar—whether from Tesla or some other manufacturer.

How Old Is Your Existing Roof?
Obviously, it doesn’t make a lot of sense to tear up a new conventional roof to replace it with a Solar Roof. But if it’s not new, you’ll want to factor the age of your current shingles or tiles into your decision, because if you’re going to need a new roof anyway, you may prefer to apply the cost toward a roof that also generates electricity.

Our staffer got two quotes for a traditional asphalt shingle roof with a 30-year warranty, and both came in around $6,800. When you deduct that from the price of a Solar Roof, it increases the savings over 30 years to $20,700 from $13,900.

How Effective Will These Tiles Be?
It’s important to emphasize that most of these numbers are Tesla’s own estimates and that Consumer Reports has not tested Solar Roof and cannot verify its energy efficiency claims.

*Editor's Note: This article, first published in May 2017, has been updated to reflect minor changes that have occured in Tesla's Solar Roof calculator, as well as to include a house in the Texas example more typical of the style of others in the region. 

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