Tesla Residential, Solar Roof, VPP Businesses Face Hurdles
July 20, 2023 by Joe Panettieri
Tesla wants to be more than an electric vehicle (EV) company, but the automaker's push into residential solar and renewable energy technology remains a work in progress. In fact, Tesla's solar deployments fell 38% in Q2 of 2023 compared to Q2 of 2022, according to an SEC filing.
Tesla CEO Elon Musk barely mentioned the company's solar roof technology during the company's earnings call on July 19, 2023 -- and he hinted that some Tesla's efforts face regulatory hurdles.
On the upside, Musk noted that the company has:
Surpassed 500,000 Powerwalls installed. Powerwall is an integrated battery system that stores solar energy for backup protection. If the electric grid fails, Powerwall ensures that customers still have power in their homes. The system detects electric grid outages and automatically recharges with sunlight to "keep your appliances running for days."
Launched Charge on Solar, which allows Tesla Powerwall and vehicle customers to charge their vehicles using their excess solar and drive "only on the sunshine that hits their roof."
Introduced a program that pays Tesla customers in Texas for participating in a virtual power plant (VPP) to provide grid support to ERCOT. "We expect these credits to lower our median customer’s annual bill by a third and to increase these credits over time as ERCOT expands market access," Musk said. "And today, we are expanding Tesla electric enrollment to new Model 3 owners in Texas, followed by all Texas vehicle customers over the rest of the quarter."
Tesla Electric, Virtual Power Plant (VPP), Solar Business Challenges
Still, Musk said some of these new developments face various regulatory and jurisdiction hurdles. He noted: "Unfortunately and somewhat similar to Tesla Insurance, bringing Tesla electric and VPP capabilities to our customers requires working through a fractured regulatory environment on a jurisdiction-by-jurisdiction basis. In the long run, the value of residential energy software and hardware will be driven by the level of market access that utilities, market operators and regulators permit."
Meanwhile, Musk and Tesla did not mention Solar Roof or Solar Panel deployment figures during the earnings call. Dig into the actual Q2 2023 earnings report and you'll find mixed news:
The bad: Solar deployments, in terms of megawatts (MW), fell 38% in Q2 of 2023 compared to Q2 of 2022.
The good: Storage deployments, in terms of megawatt hours (MWh), grew 222% in Q2 of 2023 compared to Q2 of 2022.
Read between the lines, and Tesla's solar roof business has failed to capitalize on the U.S. homebuilding market, where permits for future construction recently hit a 12-month high, according to the U.S. Commerce Department.