tesla solar renting

Tesla’s solar renting program: what you need to know

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Tesla solar is back. After quarter over quarter of declining solar installations, Elon Musk launched (via tweet, of course) a new product for residential solar: the Tesla solar rental program. The program is a return to Tesla’s SolarCity roots, with a unique twist on the product that made SolarCity the leading national installer of solar prior to its acquisition by Tesla. 

How does Tesla’s solar rental program work? 

Generally speaking, there are two primary methods for financing solar: customer-owned or third-party owned. In a customer-owned installation, you purchase your panels outright either with an upfront purchase or with a solar loan. With a third-party-owned installation, a solar company installs solar panels on your property and retains ownership of the equipment, while you make a monthly payment for the solar power produced by the panels. 

Tesla’s solar rental program is a new twist on the traditional third-party ownership agreement. Instead of signing a 20-year contract for a solar $0-down lease or a power purchase agreement (PPA), the Tesla solar rental program allows you to install solar with no upfront cost, and with no long-term contract commitment. 


The Tesla solar rental program offers customers in six states–Arizona, California, Connecticut, Massachusetts, New Jersey and New Mexico–three, pre-set options for installing solar on their homes:

  • A small, 3.8 kilowatt (kW) installation for $50 per month;
  • A medium, 7.6 kW installation for $100 per month;
  • And a large, 11.4 kW installation for $150 per month (note these costs are higher for California residents). 

For a size reference, in 2018, the average system size installed in the US was 7.6 kW (according to SEIA), while the average EnergySage solar shopper received quotes for 9.6 kW systems

While there is no long-term commitment, the Tesla solar rental program originally included a $1,500 solar panel system removal clause. The company stated that this fee is strictly to recover their own costs incurred by removing panels. Recent reports indicate that Tesla may no longer charge a removal fee. We recommend continuing to include the costs of this potential removal fee in determining the break-even point for the Tesla solar rental program. 

Why is Tesla introducing the rental program now? 

The rental program is a shot in the arm for Tesla’s struggling solar business. Since acquiring SolarCity, who was once the largest residential solar company in the US, Tesla has slowly been phasing away from the solar market. In fact, Tesla quarterly solar installations dropped from 93 megawatts (MW) in Q3 2018, to 73 MW, to 47 MW, and, finally, to 29 MW in Q2 2019. This came about as Tesla moved away from traditional residential solar marketing practices, quickly introduced solar purchasing to their electric vehicle stores, and then moved the entire solar business online. The Tesla solar rental program has the potential to make solar more accessible to a wide group by pairing no upfront cost with no long term contract. 

Will the Tesla solar rental program save me money? 

The short answer: yes, but not as much as you would save by owning your own solar panels (a fact that Elon Musk has acknowledged in the press since the rental program’s launch). The longer answer? It depends. 

The amount of money you could save with the Tesla solar rental program primarily depends on where you live, which influences two key factors: solar electricity production and the price you pay for electricity. The amount of electricity produced by solar panels varies dramatically across the six states where the Tesla solar lease program is available, with the same size solar system producing nearly 40 percent more electricity in New Mexico than in Massachusetts, according to PVWatts data. Given that the monthly cost of rental solar panels is the same in New Mexico and Massachusetts, a solar shopper would receive more bang for their buck from a production standpoint in the Southwest than in the Northeast.

The other key component of determining whether the Tesla solar rental program can save you money is how much you pay for electricity. Solar saves you money by helping you avoid a portion (or all) of your electricity bill. Since the cost of electricity varies across the country, it’s not only important to know how much electricity your panels will produce but also how much you would have paid for electricity if not for your solar panels. 

For instance, although you would receive more solar production for the same price in New Mexico than in Massachusetts, the cost of electricity is much higher in the Northeast. As a result, the savings from the rental program–i.e., the cost of purchasing electricity from your utility versus the monthly cost of the rental–might actually be higher in Massachusetts, even though the panels produce less electricity.

It is important to remember that the Tesla solar renting program is entirely no-strings-attached. When calculating how much you could save by joining the program, you also need to consider the $1,500 fee for panel removal should you choose to opt-out. If you stand to save an average of $30 per month from the solar panels, or $360 per year, you’d need to keep the solar panels for about five years to ensure that you break even (by saving enough on electricity bills to offset the cost of the panel removal fee.)

What to consider before participating in the solar rental program

There are a number of key questions to ask before participating in the Tesla solar rental program: 

1. What solar equipment is used? 

There is a wide variety of quality and performance across solar panels, which, accordingly, come at different price points. Knowing what equipment is being installed on your roof may help you determine whether you’re getting a good deal, as well as the likelihood that the panels will continue performing for a long time.

2. Are you okay not receiving the ITC and other incentive benefits?

 One great aspect of owning your own solar panel system is that you receive the full benefit of the solar investment tax credit (ITC), as well as checks in the mail for any rebates or performance-based incentives in your state. In this case, Tesla receives those credits since they own the system.

3. How long do you need to participate in the rental program to offset the buy out clause? 

As mentioned above, the $1,500 panel removal fee can quickly offset any monthly electricity savings from renting the panels. Make sure you know how long you’d need to continue renting panels to break even after accounting for the $1,500 fee.

4. Will your monthly costs to rent increase in the future? 

Early looks at the Tesla contracts indicate that they can increase the monthly cost of the rentals in the future. It’s important to know how frequently and by how much they can increase your monthly cost; this will help ensure that you don’t end up paying more for solar than you would for electricity from the grid in the future.

Other methods of going solar

The Tesla solar rental program is a very interesting, unique new twist on the old third-party ownership model that allows people to go solar without putting down any money upfront. These days, however, third-party ownership is not the only way to go solar while paying zero down. In fact, over the last couple of years, solar loan providers have begun to offer $0 down payment loan options for financing solar. Interested in owning solar, but prefer not to pay for the panels upfront? Register for a free account on the EnergySage Marketplace to receive custom solar quotes from local solar companies.


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About Spencer Fields

Spencer is the Content & Research Manager at EnergySage, where he writes about all things energy. Prior to joining EnergySage, he spent five years at Synapse Energy Economics, providing environmental, economic and policy analysis for public interest groups. Spencer has degrees in Environmental Studies and Hispanic Studies from Brown University, meaning when he's not in the office you can find him outside or traveling somewhere to work on his Spanish.

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