Is Tesla’s rent solar program worth it?
Published on August 21, 2019 by Catherine Lane
Last updated on September 09, 2019
5 minutes read
Tesla announces new rent solar program
On August 18, 2019, Tesla announced their new solar rental program with hopes that it will bolster their declining solar business. The program is offered in 6 states — Arizona, California, Connecticut, Massachusetts, New Jersey, and New Mexico — with costs starting as low as $50 per month.
Not only does the program offer a low monthly rate, there are no upfront installation fees or long-term contracts. Being that there is no binding obligation, a renter can choose to have the system removed from their home at anytime - for a fee. As part of the agreement, renters give Tesla the rights to all eligible tax credits, rebates, and solar renewable energy credits (SRECs).
Image source: Telsa.com
But is the rent solar program as great as it seems? In some cases, yes, this program can be the perfect way to take advantage of solar without having to worry about a large financial expense. For many others, though, buying solar is a significantly better long-term investment.
What are the costs of renting solar?
Homeowners can choose one of three system sizes to rent:
- A small system, equal to 3.8 kilowatts (kW) in size;
- A medium system, equal to 7.6 kW in size; or
- A large system, equal to 11.4 kW in size.
The rental fee you pay each month depends on where you live and what size system you choose. The monthly payment covers the price of the panels and other hardware, installation, support, and system maintenance. But be aware, according to Tesla’s subscription agreement, these monthly rates are subject to change at any time.
The following table shows the monthly rates for each system size where solar rental is available:
The most unique feature of this program is the lack of a term contract; there is no minimum amount of time that the solar panels have to be on your roof. If a renter decides a month after installation that they don’t like the solar panels, all they have to do is contact Tesla and pay the $1,500 removal fee, which includes removing the panels and repairing damages to the roof.
The roof restoration provided by Tesla repairs any damage associated with system removal and guarantees that these patches will remain waterproof for 1 year. A guarantee of only 1 year suggests that they won’t be performing the highest quality repair work, so on top of the $1,500 removal fee, it’s likely you’ll have to pay for some future roof repairs as well.
If a renter loves having solar on their roof, Tesla offers the option to purchase the rental system after 5 years. Tesla has not provided much detail on this, so it is unclear what the cost would be to purchase the system after the rental period.
Update on September 9, 2019: A recent Twitter announcement by Tesla’s CEO, Elon Musk, revealed that the $1,500 removal fee will be waived for anyone who signs up for the rent solar program before September 30, 2019. However, unlike the original solar subscription agreement, a new agreement released by Tesla on September 7, 2019 does not mention any warranty on roof repairs associated with system removal. This is something to keep in mind if you are considering participating in the rent solar program.
Image source: Telsa.com
Am I eligible for Tesla’s rent solar program?
Tesla’s rent solar program is only available in 6 states in the US: Arizona, California, Connecticut, Massachusetts, New Jersey, and New Mexico. Additionally, only residents who are serviced by certain utility companies can take advantage of renting solar. Qualifying utilities are listed on Tesla’s rent solar website. You must own your home in order to be able to rent solar.
How do incentives work with the Tesla solar rental program?
Even though solar panels are installed on your roof, Tesla owns the system. Because ownership of the system belongs to Tesla, not you, the homeowner, Tesla will receive the available solar incentives offered in your state and will retain the rights to any SRECs the system produces. In New Jersey, for example, homeowners with a 5 kW system can earn over $2,400 a year from SRECs alone.
The good news is that homeowners can still take advantage of net metering. So if the system you rent produces more electricity than you use, you will receive a credit on your electric bill that will offset future energy usage costs. Check out Solar Power Rocks for a detailed look at the specifics of net metering in your state.
Renting vs. buying Tesla solar
Renting gives homeowners added flexibility over buying solar panels in that they can remove the panels whenever they’d like. This option could allow homeowners to immediately enjoy the benefits of solar without having to incur large upfront costs.
While renting through Tesla is a good short-term option, it is not the most profitable way to go solar. If you take a closer look, you will see that with the amount spent on rent over time, you would be better off buying the system outright. Even the CEO of Tesla, Elon Musk, acknowledges that it is better to buy a system than to rent.
The tables below illustrate the estimated long-term savings for renting versus buying through Tesla. “Value generated per year" is taken from the low-end of Tesla’s approximations.
For the sake of simplicity, many factors such as O&M costs, rate inflation, module degradation, and value from SRECs are not taken into consideration. However, factoring these in would not substantially change the results.
Estimated 25-year savings by renting a medium (7.6 kW) solar system
|State||Annual Rent||Value Generated
|25 Year Savings
(including cost of rent)
Estimated 25-year savings by buying a medium (7.6 kW) solar system
after Tax Credits
|25 Year Savings
(including system cost)
It is clear that over time, the savings from buying a solar system are significantly greater than the savings from renting a system. In New Jersey, renting solar could potentially offer zero additional savings, as the value generated by the system would just cover the rental costs.
In other states, such as Connecticut, renting solar would provide savings, but the savings you would accumulate had the system been purchased are almost 5 times higher. If you plan on having a solar system on your home long-term, it would be best to purchase the system, as opposed to renting it.