Could Tesla's new price structure force a digital revolution in the industry?
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- Jul 1, 2020 4:01 pm GMT
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On June 19, Tesla announced they’d be cutting the cost of their solar panels to 1/3rd of the industry’s average. In the statement released on the company’s website, they wrote: “Today we are introducing the lowest-ever cost to go solar in the United States. Our average system size is now one-third less expensive than the industry average and we have recently introduced a lowest-price guarantee. If you change your mind after purchasing or are unhappy with the system, we will uninstall it and issue a full refund within seven days from system turn on.”
Tesla’s new pricing structure coincides with a revamped ordering system that was explained in the same press release: “Our new pricing is made possible by several simple improvements to a decades-old industry. We made ordering and installing solar easy by moving to fixed sizes that customers can order with a single click online — no more need to spend hours in consultations reviewing old utility bills. More than 80 percent of our customers move forward with the standard size recommended by our website, and the move to a digital experience helped cut our sales and marketing costs by 64 percent.”
This is a big deal. Up until now, buying and installing residential solar has been an expensive and frustrating process. Much like American healthcare, it’s seemed stubbornly resident to the liberal market forces that make buying other things, like cars and smartphones, a relative breeze. If Tesla can provide a more intuitive purchasing experience while simultaneously cutting prices, Elon Musk and gang could quickly retake the number one spot in home solar panel sales.
Of course, there’s no guarantee this will all go as planned. Solar is subject to a medley of different regulations across states that most products simply are not. It’s easy to imagine how a new order system could prove more difficult in some areas than others. What’s more, for this move to really pay off, it would have to be so good as to allow installers to reduce their customer acquisition investment. That’s a big task when we’re talking about a product so few potential buyers know much about.
Ok, but what if it does pay off? What if we see an explosion of solar installations as a result? Solar is neat for obvious reasons, but it also poses a unique set of challenges to our grid. Sudden massive adoption of the renewable would require operators to make some changes.
The case of Hawaii is instructive: The 50th state was an early adopter of solar technology in the beginning of last decade. However, the islands’ traditional grids weren’t prepared for the extra energy production brought on by so many solar units, and unlike on the mainland where different utilities are connected, the Hawaii Electric Company (HEC) had no neighbor they could offload excess power to. By 2013, HEC, the state’s largest utility, had put in place a solar waiting list to curb the burgeoning renewable’s implementation. Two years later, in 2015, the state ended net metering, causing significant turbulence within the young industry.
To get back on track, HEC has had to modernize its grid with a slew of smart technologies: advanced inverters, smart meters, a slew of sensors, etc. And while such tools offer many benefits, they also bring on a whole new set of security concerns. The more digital a system becomes, the bigger its attack surface area. As far as I know, the utility hasn’t been seriously victimized yet, but the risk remains nonetheless.
Even if Tesla’s gambit doesn’t pay off, renewables are bound to become more persuasive this decade. As a result, our grid will need to be made more intelligent. What a time to be alive.