Tesla's solar power business could be worth billions. Tesla's Energy sector which comprises its solar products and energy storage devices have taken a backseat to the company's EV business for quite some time. However, 2020 seems to be the year for Tesla Energy.
According to Bloomberg, solar energy product installations are gaining traction and closing in on the capacity of coal, oil, and natural gas-powered plants. In 2019, solar product developers commissioned up to 35 projects each providing at least 200 megawatts of power around the world.
The established news site explained that the growth in the solar energy business--which has led to bigger projects--allowed developers, like Tesla, to reduce the price of electricity to consumers. As a result, smaller traditional plants are facing stiffer competition. In other words, it is the perfect time for Tesla Energy to start growing.
Tesla's Energy sector completes the company's ecosystem. As Gali Russell from Hyperchange explained in his recent video, Tesla's EVs consume energy, its solar products produce energy, and lastly, its storage devices store energy. To understand how integral Tesla Energy is to the entire company, each part of the business must be analyzed.
Tesla Model 3 production and its subsequent ramp have been the main focus of the electric car maker thus far. With Giga Shanghai covering the Chinese market and Giga Berlin underway, however, it appears the EV automaker has more time and brainpower to spare for its solar products, specifically its Solarglass Roof V3.
As Steven Ryan from YouTube channel Solving The Money Problem pointed out in a recent video, Tesla Energy has two types of customers: commercial and residential. Solarglass Roof V3 is a Tesla product that is geared more towards residential customers. It specifically hits a certain demographic of consumers who have two desires or needs: 1) they want solar panels to produce energy 2) they need or want to replace the roof of their homes.
Looking forward to international expansion later this year 😀— Elon Musk (@elonmusk) February 16, 2020
With Solarglass Roof V3, Tesla is offering customers a unique product at a comparable price in either the solar panel or re-roofing sector. Ryan did the math on Tesla's potential income based on the re-roofing market solely in the US, and based on his estimates, the potential of the company's residential products was vast.
According to Ryan, if Tesla captured only 5% of the re-roofing market which was equivalent to 250k Solar Roof installations per year with an average price of $40,000, the company could make $10 billion in revenue from just its Solarglass Roof V3 product.
Keep in mind, however, that Tesla's solar panels are still available for purchase. Ryan estimated that Tesla could make up to $1.5 billion from its solar panels in the US alone.
Tesla has just started ramping its Solarglass Roof V3 product in the United States--specifically California. Ryan's calculation only considered the US market, but Tesla plans to distribute Solar Roof V3 globally by the end of the year, significantly increasing its potential billion-dollar revenue from the product.
The company's energy storage devices comprise the other part of Tesla Energy, which has been gaining much traction in the US of late and has already established a good name for itself in Australia. In this segment of Tesla Energy there are three products: 1) Poweralls, 2)Powerpacks, and 3) Megapacks.
Powerwalls are tailored more for residential customers to use in their homes. However, Tesla proved its versatility once again with its virtual power plant in Australia, which uses the company's Powerwalls.
In a virtual power plant, multiple homes with solar panels provide Tesla Powerwalls with energy, which the community can feed into when the grid needs backup. Tesla's virtual power plant hasn't reached its full potential yet but has already done its job effectively at least once.
In contrast, Powerpacks and Megapacks are for commercial use, bringing Tesla Energy into a whole different revenue sphere. Tesla has already proven the mettle of its Powerpacks with its Big Battery in the Horndale Power Reserve, which is currently undergoing expansion since it has become useful to the surrounding community.
Meanwhile, in the US, Tesla was recently given permission to install one of the largest energy storage facilities in the world with its Megapack battery installation at Moss Landing. It has partnered with PG&E on the project.
Russell from Hyperchange noted that Tesla's energy storage business has actually continued to grow--albeit incrementally--despite the company's intense focus on its EV sector. Overall, the Hyperchange host estimated that Tesla Energy--with solar products and the energy storage devices in mind--would grow up to +45% in 2020 with a revenue of $2.2 billion.
Featured Image Credit: Tesla