If you are interested in getting a Tesla solar system installed on your home, you may be wondering how you pay for it. Do you save up cash, get a loan, or ask if you can get it for free? Although the latter option probably will not work, you can use any of those methods to pay for it, plus Tesla’s latest option: the Tesla Solar Subscription.
The high install cost of a solar system is too much for some people. Even after considering the potential future savings, pulling the trigger on spending thousands is a hard one. But what if you could dodge the high install cost and still reduce your utility bill? An easy solution is the Tesla solar subscription. Read on to learn more.
What Is the Tesla Solar Subscription?
After a few quarters of solar system sales decline, Elon Musk announced via text that Tesla would begin offering a solar subscription service. This method of providing solar power to residents departs from the traditional buy/sell marketplace that currently dominates the solar market.
The Tesla solar subscription is a monthly service for the use of Tesla solar panels and the Tesla solar inverter. You pay a monthly flat rate to use the solar panels and provide solar energy to your home. The solar subscription service is available to resident in 6 US States and includes the following:
- Solar panels and installation
- Solar inverter and installation
- Solar Gateway (only if a third-party inverter is installed)
You can also upgrade your subscription at any time and add more solar panels. However, there is currently no way to reduce the number of solar panels in your solar subscription.
The solar subscription monthly fee is priced per region, and it is not the same cost in all regions. The reason for the regional cost difference is because Tesla wants to ensure that the cost of their subscription is not higher than the energy cost savings the solar panels provide.
Tesla’s Solar Subscription Will Save You Money
Yes, you understand that correctly, Tesla wants you to make money each much with your solar subscription!
Another great thing about the solar subscription service is that there is no upfront cost for installation either. You pay nothing for the installation, yet you get to reap the benefits of saving money and producing clean energy. To recap:
- You pay $0 for installation
- Your electricity bill drops by multiple dollars
- You pay a monthly solar subscription fee that is fewer dollars than your energy savings
For example, let us say your current energy bill is $200 per month, and you enroll in the solar subscription. After the install, your energy bill is reduced by $120 per month, and you now pay $80. Your Tesla solar subscription will be less than $120 per month. This keeps your net monthly cost under the original $200 and saves you money!
The Tesla solar subscription is a great option for consumers that do not want to pay the upfront installation cost. It gives them the advantage of reducing their monthly bill and providing clean energy to their homes. The solar subscription is not only a great option for homes. It is also available to commercial businesses as well.
How Is the Solar Subscription Advantageous to Tesla?
Since Tesla’s sales of solar panels declined from 2017 to 2019, their go-to-market plan needed a revamp and some out-of-the-box ideas to boost their sales. In a departure from the norm, Tesla released the solar subscription program to get more solar panels on roofs. The program works because:
- There are no upfront costs to the consumer
- It lowers the consumers overall monthly cost
- Tesla still makes a profit off the subscription
Getting more solar panels on the market and increasing clean energy production is also an altruistic goal for Tesla. From their cars to their solar systems, Tesla is all about reducing reliance on fossil fuels and creating clean energy.
Residential Tesla Solar Subscription
The residential solar subscription is available to incentivize homeowners that do not want to pay the high upfront installation cost to get solar panels installed on their home. Homeowners rent the solar panels from Tesla and pay no installation fees. The solar subscription program is available to residents in the following states:
- New Mexico
- New Jersey
Besides having to own a residence in one of the above states, you also have to get your utilities from one of the Tesla-approved utility companies. California has the most utility companies available to work with a Tesla solar subscription.
You can find an up-to-date list on Tesla’s solar subscription page or reference the below table.
|California||Massachusetts||New Jersey||Connecticut||Arizona||New Mexico|
|Pasadena Water & Power||Eversource Energy – Boston Edison||Orange & Rockland||United Illuminating Company||APS||El Paso Electric Company|
|Biggs Electrical||WMECO||PSE&G – NJ||Eversource Energy||TEP||PNM|
|Colton Electric||Unitil||First Energy|
|Glendale Public Service||NSTAR Cambridge||Atlantic City Electric|
|Gridley Municipal||NSTAR Commonwealth|
Online Quoting Tool for Tesla Solar
If you meet the geographic and utility company qualifications, you can enter your address and monthly electricity bill total into Tesla’s online solar panel quoting/estimating tool.
Based on the size of your home, location, and energy bill Tesla will provide a recommendation on the solar power rating size you should install. The power sizes of solar panels available to residents are:
- 4.08 Kilowatts
- 8.16 Kilowatts
- 12.24 Kilowatts
- 16.32 Kilowatts
In the quoting tool, you can toggle the sizes to see your estimated energy savings for each size. With the Tesla solar subscription, you can rent any of the four sizes- however, Tesla will recommend which option is best for you.
Keep in mind that if you choose a larger size, you will save more on your energy bill. However, your Solar Subscription cost will go up as well.
Approximate Cost of Tesla Solar Subscription
Remember, the cost does vary per region, even having differences within the same state. When Tesla launched their Solar Subscription program in 2019, they provided the following per month cost estimates for all six states, with CA having a different pricing structure:
|NJ, NM, MA, CT, & AZ Solar Subscription Approximate Monthly Fee|
|Panel Type/Size:||11.4 kilowatt||7.6 kilowatt||3.8 kilowatt|
|Energy production per day||29-41 kilowatt hours||19-28 kilowatt hours||10-14 kilowatt hours|
|Approximate Monthly Cost||$150||$100||$50|
California customers will pay a bit more because energy costs, installation, and labor are more costly in this state. Here are the approximate costs for the Solar Subscription in The Golden State:
|California Solar Subscription Approximate Monthly Fee|
|Panel Type/Size:||11.4 kilowatt||7.6 kilowatt||3.8 kilowatt|
|Energy production per day||29-41 kilowatt hours||19-28 kilowatt hours||10-14 kilowatt hours|
|Approximate Monthly Cost||$200||$130||$70|
After you make a selection on the size of the solar panel system you want and sign up for the solar subscription, Tesla will arrange the installation. The signup process is the same for all six states. Your subscription will start once the solar system is powered on.
Commercial Tesla Solar Subscription
Tesla also offers a solar subscription to commercial and industrial customers. The commercial program is currently only available in the state of California for commercial and industrial companies that would like to lower the energy bill on their building or have permission from the owner. It is limited to the following utility companies in CA:
- San Diego Gas and Electric (SDGE)
- Pacific Gas and Electric Company (PG&E)
The program uses commercial solar panels and allows businesses to get solar power without having to commit to a multiple-year solar contract. To qualify for the commercial solar subscription, the business must own its building or have permission from the building owner.
The following solar panel system sizes are available with the commercial solar subscription:
- 240 kilowatts
- 120 kilowatts
- 40 kilowatts
The commercial solar subscription allows customers to upsize or downsize their solar panel system. This differs from the residential solar subscription program that only offers to upsize. However, for commercial downsizing, Tesla will charge you for the removal of the extra panels to pay for the labor and return shipping and handling.
Cost Breakdown of Commercial Solar Subscription
Since the commercial solar subscription service is only available in one region, Tesla lists a flat subscription per kilowatt-hour for the 40 kW subscription. The subscription details for the 40 kW system are as follows:
- Costs $0.13 per kilowatt-hour
- Can generate up to $12,000 in electricity cost savings per year
After subtracting out the cost of the solar subscription, the $12k of yearly cost reduction in your business’s electricity bill would be approximately $5,000 in total cost reduction each year!
Keep in mind that the $5,000 yearly net cost reduction is for the smallest system, the 40 kW solar panels. Imagine how much cost savings you could generate with the 240 kW system? Well, surprise! You do not have to imagine, as you can estimate it with some simple math.
- 40 kW goes into 240 kW exactly six times (240/40).
- The net cost reduction is $5,000 for a 40 kW system.
- The net cost reduction for the 240 kW system will be six times that, or $30,000.
This back-of-the-napkin math is assuming that your cost savings increase linearly with the amount the kilowatt size of the system. It probably does not exactly, but it is still a good estimate for you to consider. As you increase the system size, your rental per kilowatt-hour goes down – 120 kW costs $0.11/kWh and 240 kW costs $0.10/kWh.
Signing up for Commercial Solar Subscription
To sign up for the commercial Solar Subscription, you must first submit an order online on the Tesla commercial solar page. A Tesla customer service representative will then reach out to you via phone to go over the plan and get detailed information from you.
After determining what size system is right for your business, Tesla will arrange an installation date and arrange a contractor to hook up the solar panel system to your business. With the commercial solar system, the panels can only be installed on your roof and cannot be installed on:
- The ground
- On an outbuilding
- On a carport, awning, or pergola
If you cannot have the system installed on your roof, the commercial solar subscription service is not a viable option. Just like the residential solar subscription, you can cancel the commercial solar subscription for any reason and at any time. However, Tesla will charge to remove the panels.
Can You Add the Tesla Powerwall or Powerpack to the Solar Subscription?
The Tesla Powerwall is a battery backup that stores your extra solar energy. The Powerpack is a larger version of the Powerwall intended for commercial and industrial customers. They can be used as a generator for your home or business, providing you power when the power is out.
Additionally, it can provide your home with energy during non-solar peak times, making you even less dependent on the power grid. Unfortunately, you cannot add the Powerwall or Powerpack to your Tesla residential or commercial solar subscription.
However, you can buy the Powerwall and Powerpack yourself with cash or a loan to use with your solar panels. A single Powerwall costs around $12,000. Some states provide a rebate for the Powerwall. The Tesla Powerwall is a great addition to the Tesla solar subscription.
It provides backup power and could provide energy to your business or home after sunset. Since it stores extra energy for later use, it will further reduce your energy bill.
If you are getting a solar subscription, strongly consider pairing it with a Powerwall if you can pay the extra cost with cash or through a loan.
What Happens If You Cancel Your Solar Subscription?
If you would like to cancel your solar subscription, you can do so by contacting Tesla’s customer support. Tesla makes the process easy and even allows cancellation of the service at no charge.
Yes, you read that right- you pay $0 for the cancellation of the Tesla solar subscription, and you can do it for any reason.
However, if you would like your solar panels uninstalled, you do have to pay a removal fee of $2,500. Tesla claims that the removal fee is only to cover the cost of uninstalling and transporting the panels and that they do not make any money off of this. This is yet another altruistic policy Tesla has in support of their clean energy initiatives.
Can You Get the Tesla Solar Roof Through the Solar Subscription?
Tesla’s solar subscription service is arranged to provide a fast and smooth transition into and out of the program. Installing solar panels and uninstalling solar panels is much easier than the replacement of the Tesla Solar Roof. A subscription on the Solar Roof would be cost-prohibitive for the following reasons:
- Tesla Solar Roof is made custom for your home and cannot be reused elsewhere.
- It cannot be uninstalled simply like panels.
- The Solar Roof takes long to install and even longer to uninstall- a traditional roof would have to be installed after the Solar Roof is removed.
Therefore, Tesla does not offer a solar subscription on the Tesla Solar Roof. If you want the Solar Roof and you do not have the money to pay cash, you can always get financing through Tesla or get a loan from a bank or your local credit union.
How Much Does a Tesla Solar System Cost Without the Solar Subscription?
For you to determine if the solar subscription is right for you, you may want to know how much a Tesla solar panel system costs if you were to pay cash or buy it through a loan. The costs for solar have been coming down the last few years, and the cost may not be as high as you think. You can roughly say it costs about the same as a car.
If you buy the solar panels, you get a better payback period and other advantages, like access to the tax credits. The table below shows how much a Tesla solar panel system costs if you are planning on not utilizing the solar subscription:
|Residential Cost of Tesla Solar System without Solar Subscription|
|Size||4.08 kilowatts||8.16 kilowatts||12.24 kilowatts||16.32 kilowatts|
|Price (after federal tax incentives)||$6,000||$12,000||$18,000||$24,000|
The commercial panels are larger and have different specifications than the residential solar panels. They produce more kilowatts of power, which is needed by the larger building. Accordingly, they are more expensive as well, as shown in the below table:
|Commercial Cost of Tesla Solar System without Solar Subscription|
|Size||40 kilowatts||120 kilowatts||240 kilowatts|
|Price (after federal tax incentives)||$66,000||$142,000||$256,000|
As you can see, the larger solar panel systems have a significantly higher upfront cost. However, they also have a very high potential for cost savings, for example:
- A 240 kW system has a 25-year projected savings of $1,300,000
- A 120 kW system has a 25-year projected savings of $650,000
- A 40 kW system has a 25-year projected savings of $290,000
These estimated savings could be even more if the price of electricity increases. As you can see, the potential savings for a commercial building are gigantic. With a top estimate of over $1.3 million after 25 years, it is a wonder why more companies are not solar powered.
Other Ways to Pay for a Tesla Solar Roof
There are other ways to pay for the Tesla solar panels, all of which will save you money off of your energy bill. Besides the solar subscription, you can pay for the Solar Roof with these methods:
- Personal loan or solar loan
- Full cash payment upfront
Paying with cash is the best option, as you quickly start making your money back through immediate savings on your energy bill. However, it requires a lot of upfront capital. Taking a loan is the second-best option for paying for Tesla solar panels. With a loan, you own the system, and you can pay it off early if you choose to.
A solar subscription is still a great option, but you do not get as great of a value as you do by paying cash or using a loan. However, you still make money through the energy savings since Tesla sets the subscription price less than the money you save on your electricity expense.
If you are weighing your options on which of the three methods you will use to pay for a Tesla solar panel system, you have a few things to consider. What option is best for you? Consider the information in the following table as you decide:
|Payment Type:||Cash Upfront||Solar Subscription||Loan|
|Who owns the system?||You||Tesla||You|
|Tax Credits||You get all available tax credits||To keep subscription cost low, Tesla keeps the credits||You get all available tax credits|
|Warranty||25 Years||N/A Tesla owns it||25 Years|
|Money Cost Reduction||Highest||High||Higher|
Here are some additional things to consider when you are trying to choose between a loan, cash payment, or the solar subscription:
- Are you planning on moving soon?
- Will you have more capital in the near future to pay cash?
- Do you plan to stay in the home/business long-term?
- What is your monthly cash flow?
Weighing your options and understanding your specific needs will help you make the right decision.
Can Tesla Provide You with Solar Financing?
If you are still interested in other options besides the solar subscription, you may be wondering if Tesla provides solar financing. Tesla can arrange a solar loan for you when you place your order for commercial and residential buildings. During the process, they will also estimate the cost of your loan payment.
The monthly loan payment is also typically lower than your electricity bill, so you will be saving money right away. Solar loans typically have a grace period for the first month after installation before you are required to make a payment.
Tesla does not directly hold the solar loan. They only arrange a loan servicer to work with you. Many solar loan lenders require you to apply your Federal Tax Credit to the solar loan of the system within 18 months of the installation date. That means once you receive the tax credit after you file your taxes, you use that money to pay down the loan.
What is the Best Tesla Solar Purchasing Option: Rent or Buy or Loan?
How does the solar loan compare to the Solar Subscription or paying for it in cash? You should always consider what is best for you in your current financial state. Do you have enough savings to live off, have an emergency fund, and have enough extra cash to pay for a Tesla solar system with a signed check? Paying cash has these benefits:
- Greatest lifetime savings of the three options
- You have complete ownership
- You get all the tax incentives and credits
If you are in a good financial state and can afford an extra monthly loan payment and are not debt-averse, then the Solar Loan might be the best option for you. The solar loan’s monthly payment is typically more than the solar subscription but still less than the electricity cost you save.
Lastly, if you have lots of debt, if you prefer a subscription, you dislike going into debt with a loan, or if you plan to move soon, the solar subscription may be a good option for you. There is no upfront cost, you immediately save money each month, and you can cancel at any time.
Purchasing with cash or purchasing a Tesla solar panel system with a loan are two additional purchasing options you can explore for both residential and commercial buildings besides the Tesla solar subscription service.
The Tesla solar subscription is exactly how it sounds- you pay a monthly fee to rent solar panels from Tesla. They install the panels for free, you enjoy a monthly electricity bill reduction, and save the difference.
The Tesla solar subscription service is a great way to get solar energy for your home and reduce monthly costs. There are a few drawbacks, like not receiving the solar tax incentives. However, the subscription ultimately is a good decision if you cannot pay the upfront cash for their solar system.