Elon Musk's
announcement last week from Wisteria Lane of solar roof tiles completed his
trifecta of the building blocks of a sustainable future. This future is
compelling. You start with these great-looking solar tiles that generate
electricity from the sun, and selling any excess power you generate back to the
power company. You store a day to a week's worth of your free electricity in a
Tesla powerwall in your garage to use after the sun goes down, and you use that
same free power to charge your affordable new Tesla model 3.
So, with the launch
of Solar City's solar tiles, the solar trifecta of generating electricity,
powering your home, and powering your transportation is complete. I am excited
about this new future. I drive an 8 year old Sonata which is a good car, but I
could picture myself cruising to work in a Tesla model 3 zipping past gas
stations while laughing at the luddites pumping gas into their cars who haven't
come to the future yet. Even more exciting is knowing that Teslas are equipped
with the hardware to drive themselves when the software and regulations are
ready for prime time. One day I could be zipping to work from the back seat of
my Tesla while it drives me to work, and while I'm working, my Tesla is out
working as a part of Uber's fleet bringing in some side revenue, and it arrives
at my office just in time to take me home.
I'm also excited
about the prospect off generating my own electricity and being independent from
the grid. After spending a summer in Phoenix and paying over $400 a month in
the summer for the electricity to stay cool, having no power bill, or being
paid by the power company would be a welcome treat.
The least exciting
of the three parts of the trifecta for me is the powerwall, but it's actually
the one of the three I might buy first. The powerwall would allow me to store
electricity to run my entire house and charge my car. It also allows independence
from the electric company because the power can be used in case of an outage.
This would replace my current gas generator as my backup plan for a power
outage. It would also solve my problem of not being able to store a sufficient
amount of gasoline to make the gas generator very useful for an extended outage
situation. Most municipalities limit gasoline storage to 20 gallons or so, and
gas doesn't store well even with stabilizers added to it. So for years I've
been rotating my handful of 5 gallon gas cans into my gas tank as often as I
remember to do it (every year or so). The powerwall solves all those problems
because it's a giant battery that can power an entire house. There's nothing
else to store, and when combined with the solar tiles, it magically recharges
itself every day.
Another great
feature in a hot climate would be to store energy in the powerwall during
off-peak hours, then use that power during the peak times when electricity
costs 3 to 4 times as much. This could save hundreds of dollars a month during
a Phoenix summer.
So, with all these
benefits (not to mention saving the world by cutting down on fossil fuel use),
why haven't I put the $1,000 down for a Tesla Model 3, had a powerwall
installed in my garage, and signed up a contractor to install a solar roof? The simple answer is my return on investment. ROI is a
common term in the investing world, but it applies to personal finance as well.
In this situation, I'm referring to comparing the incremental savings I would
enjoy to the cost of joining Elon Musk's solar-powered future.
The costs are pretty
steep. To go all in with the trifecta, you need a Tesla Model 3 which starts at
$30k. I've never bought a new car off the lot and I'm not sure I ever will. The
first few years of depreciation are just too painful for me. The most I've ever
paid for a car was $13k for a 7 year old Buick Enclave. A decade or more ago, I
used to be an early adopter. I was always scheming how to get the newest
gadget. I got the first Android phone the day before it launched, but now
phones have progressed so much, I don't get too excited and I'm usually a
generation behind the latest and greatest because let's face it, a phone that's
a year or two old is still pretty amazing. While I still love technology, I'm
more of a bargain shopper than an early adopter in these days of raising a
family.
But for the sake of
this ROI analysis, let's assume I'm willing to throw down $30k for the entry
level Model 3. The next piece is the solar roof. While pricing hasn't been
released yet, a Solar City executive said something regarding pricing that the
tiles would not be much more expensive than traditional roofing tiles, but
those can vary widely in cost of materials from $7k to $70k based on the size
and other characteristics of the roof. I think it's safe to pick a number in
the middle for an average house so let's call it $35k for a solar roof, plus
I'm sure an extra $10k for the installation labor so roughly $45k for the whole
solar roof.
Last, let's take the
Tesla's 14 kWh powerwall 2. The powerwall sells for $5,500 plus $1,000 for
installation. Tesla's handy estimator puts my 5 bedroom house at an estimated
50 kWh usage per day. So, I'd need 4 powerwalls installed to handle a power
outage or to run an AC unit all night through the summer before the batteries
recharge in the morning. That comes to a total of $23k.
So, the price tag
for joining the future is $30k for the car, $45k for the solar roof, and $23k
for the batteries for a grand total of $98k. Nearly six figures to join the
future.
Now, let's look at
the cost savings. Putting no gas in my car would be so satisfying especially
when the summer driving season kicks in and the prices go up. Let's say I fill
my car up once a week for $40 (I'm closer to $30 with gas just above $2 per gallon).
That's $160 a month I could save in gas or $1,920 annually. Let's also look at
electricity, assuming my solar roof generates enough power, and the powerwalls
store enough power to completely unplug from the power company, I'd be saving
about $200 a month on electricity or $2,400 annually. So, that's $4,320 a year
I could save in the brave new solar future.
However, when you
divide my $4,320 annual savings by my $98,000 initial investment, I'd be 22.6
years down the road before I'd see a positive return on my investment. Given
that people own homes for 7 years on average, I'd probably move and wear out my
Model 3 before I got close to seeing a return of my investment.
That's not to say
I'm only going to go for the best value. I value the environment and I see the
end of fossil fuels in our lifetimes. But I can't stomach the cost of
joining the future right now. I am really excited the pieces are being put in place
for the time I'm ready to make the jump.
I'm also a bit
concerned about putting a giant lithium ion battery pack in my garage and in
the floor of my car. Lithium ion batteries are a big step forward from the
nickel cadmium batteries that proceeded them in terms of energy density, but
they are prone to thermal runaway (catching on fire) which is a bad thing to
have happen to your car (my wife has been there), or your garage. The laundry
list of lithium ion battery caused fires gets longer each year with the current
FAA ban on the Samsung Note 7, hoverboards the Christmas of 2015, the Boeing
787, and Sony-manufactured laptop batteries a few years ago. Even Tesla has had
trouble with battery fires following accidents in Tesla Model S cars. Boeing's
engineers weren't able to pin down which of 3 possible causes of thermal
runaway caused the fires on the 787, so they fixed all 3.
But still, I've got
a little uneasiness about bringing huge piles of potentially flammable
batteries into my car and home and giving them a thorough workout every day.
Yes, we have flammable gasoline powering our cars and natural gas powering our
homes, but we also have a century of practice safely dealing with those substances
and we know how to handle them. Storing that much energy in batteries in my home, I can't help but think of the gasoline fight in
Zoolander. I'd feel a little more comfortable if someone else had the trifecta running
in their homes with no incidents for years before I take the plunge.
A scenario that
might be enough to push me into this amazing future a few years down the road
is when the technology has matured and become cheaper and safer. Let's assume
that in 5 or 10 years there are better, cheaper, and less flammable
aluminum-based batteries to replace lithium ion. This leads to a cheaper
electric car ($20k), cheaper powerwalls ($11k) and I'm building a new house so
I can install a solar roof for just the incremental price increase over
traditional tiles ($20k). Now at $51k out of pocket to join the solar future,
I'm much more likely to make the jump with an 11.8 year ROI.
The question in my
mind right now isn't if a solar powered life is in my future, it's when will I
make the jump? I'm hoping the market makes that sooner rather than later for me.
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