Tesla has hopes that 2021 will be the year for their newest innovation: solar roof tiles. Elon Musk has also stated that besides expansion in the domestic market, Tesla plans to bring their solar roof tiles to Canada and Europe this year. However, will Tesla’s roof truly be able to compete in the European solar market?
Although there is a European market for solar power, the average price of a residential solar system in Europe is much less than in the United States. Tesla will need to take both this price gap and a tendency for higher quality roofing materials into account if they want to make sales in Europe.
How much does the European price of solar differ from the United States? How cheap will Tesla have to get their solar roof tiles to be competitive? Is there a large residential market for solar power in Europe? Keep reading to learn the answers to all these questions and more!
What Is the Average Price of Residential Solar Systems in Europe?
Europe is, of course, made up of many different countries, with a variety of residential solar companies and prices.
Germany, for example, has seen its residential solar costs plummet in the past ten years to be below €2.00 per watt, which even with the exchange rate is below the US’s average cost. Germany is currently a world leader in solar panel installation because of these low average costs.
In the United Kingdom, solar system costs are higher than in Germany at between £1500 and £1600 per kilowatt. This breaks down into around £1.50 or £1.60 per watt, which is still much less than the United States, which averages over $2 per watt for residential solar systems.
Overall other European countries fall somewhere within the United Kingdom’s and Germany’s examples. The average price per watt of a residential solar system in Europe is simply less than in the United States where Tesla is headquartered. If Tesla hopes to be competitive, they will need to take this price difference into account.
Why Is the Average Price of Residential Solar Higher in the United States?
This price difference between the United States and Europe naturally leads to the question of why. The actual solar technology is produced at around the same costs and has reached a fairly standard efficiency level. Whether you buy in the US or Europe, the actual solar cells themselves are relatively the same, so what causes the price gap?
The answer is soft costs. While the hard cost of producing solar cells in Europe and the United States is fairly equal, the disparity comes into play when considering the soft costs. These costs include things such as permits, electrical work to allow installation, possible roof repairs, and other fees not directly included in the cost of producing the solar cells and panels themselves.
In the United States, the various fees for permits and additional work to install residential system is often up to 3X as much as it is in the European market. The soft costs have thus driven the average price of the US in solar to be above Europe’s average.
What Does This Mean for Tesla’s Chances in the European Market?
The fact that the higher US prices come from soft costs could be good news for Tesla. European countries seem to have less in the way of fees for solar system permits which would also bring the price of Tesla’s solar roof down.
Many European countries also have significant tax breaks and other incentives for people who install solar in their homes. Tesla uses the current US break to their advantage, and they may be able to do the same in many European countries. These tax breaks will certainly help Tesla appeal to customers who currently have no solar system in place.
In addition, if Tesla continues with their plan of hiring third-party roofers to install their tiles, which we have seen them doing already in Canada, then the problem of higher soft costs may be eliminated or at least decreased. There is no reason to suspect that European installers would suddenly charge the higher US installation prices.
Potential Problems Tesla May Face in the European Market
However, Tesla’s solar roof presents a problem when it comes to reducing soft costs to be more competitive in the European market. Installing an entirely new roof rather than solar panels is much more of a construction project. The likelihood of softs costs resulting from needed repairs and other work, such as removing the old roof, increases significantly.
Thus while it is likely that the reduced soft costs in Europe may lower the price of Tesla’s solar roof to be a more competitive number, it is also likely that the added construction in installing a new roof could add to the soft costs for a Tesla roof over a traditional solar panel system.
Tesla makes much of their solar system costing less than their competitors in the US market. Unless they can drastically reduce costs, in the European market Tesla will be on much more even footing in pricing with other solar system companies. They may need a new marketing strategy to see their product take off in such a market.
Is Europe Ready for Solar Roofs Over Solar Panels?
The other large question in considering how the Tesla roof will do in Europe relies on more subjective concerns. Will Europe find Tesla’s solar roof tiles more attractive than solar panels?
This question has a lot to do with taste, and thus at this point it is extremely difficult to answer. However, we can get an idea of how Tesla’s roof might fare based on past and current European roofing trends.
European Roofing Materials and What They Mean for Tesla
While the majority of roofs in the US are made of asphalt shingles, European houses tend to be made to last longer. European construction leans towards roofing with materials such as clay, slate, and wood, which are more expensive but also last longer than asphalt shingles.
This may be good news for Tesla as the price of their solar roof tiles is much more comparable to these higher-end roofing materials. Asphalt shingles are so cheap that it is practically impossible for the solar tiles to come close, although this changes when energy savings are taken into account.
Because Europeans pay more for roofs anyway, they may be more eager to invest in Tesla’s solar generating roofing system. However, there is a possible problem with European tastes for long-lasting roofing material. European roofs last a long time, and thus Tesla may discover there is less of a market for new roof and roof replacement construction.
Also, as part of their attempt to lower price Tesla has lowered the lifetime of their solar tiles to a 25-year warranty. While that is attractive in the US, in Europe where roofs are built with materials designed to last 40 or 50 years, potential customers may see Tesla’s 25-year tiles as a bad investment or quality issue.
Overall it is impossible to predict how Europe will take to Tesla’s solar roof. If Tesla wishes to stand a chance they will need to lower costs to be more in range with the European market. Tesla will also have to monitor how their solar tiles appeal as a roofing material to Europe. They may need to design a longer-lasting tile to please a European audience.