Net metering drives solar sales but is unsustainable. By adding Tesla batteries to their installations, SolarCity eliminates net metering need.
Net metering allows customers with solar panels to “bank” excess kilowatt-hours with their utility for withdrawal later. During long, sunny, summer days, solar panels produce more electricity than customers use. Net metering gives customers a credit for that energy to be used later when their electric use is greater than what the solar panels produce, typically at night or even in the winter.
Net metering is unsustainable, though. Customers with solar still need the utility to produce and provide power when their solar panels do not, but they may be paying nothing to the utility. Imagine if everyone had solar panels equal to their annual use; with net metering, they would pay the utility nothing, but still need the utility to provide them power. That is not a sustainable situation, and, logically requires net metering to be replaced by a different approach which will necessarily be less advantageous for sales of solar panels.
SolarCity realizes this will be a challenge, having declared it in its October 2012 S-1 filing with the Securities & Exchange Commission that “the absence of net metering for new customers would greatly limit demand for our solar systems”. SolarCity is uniquely positioned, however, because their sister company is Tesla Motors, maker of the most successful electric car in the world, the Model S.
For Tesla to be successful enough to match its stock price, they will need a cheaper electric car to have high volume sales, their planned Gen III car debuting in late 2016. The key to making this car less expensive and having large sales is simple, cheaper batteries. While skeptics believe Tesla cannot lower battery costs fast enough to make the Gen III a success, the symbiotic relationship between SolarCity and Tesla can help them both achieve the lower battery costs necessary for their longer term success.
Additional battery sales through SolarCity will help Tesla lower battery costs. Lower battery costs not only helps Tesla, but also helps SolarCity sell more battery integrated systems. That will help SolarCity eliminate its net metering need and put it well ahead of other solar system providers.
The company plans to introduce in 2015 a bundled package of solar panels to generate power during the day and batteries that will retain the power for use at night, Chief Executive Officer Lyndon Rive said in an interview today. San Mateo, California-based SolarCity will test it at 100 sites this year.
“There won’t be a need for net metering when storage is deployed onsite,” Rive said today in an interview in New York. “Storage is going to have a big impact.”
SolarCity is testing 8 kilowatt-hour battery packs provided by Tesla Motors Inc. (TSLA), the electric car company run by Rive’s cousin Elon Musk.
Rive says declining battery prices means he can include the the cost of storage and still provide electricity to consumers in California and Hawaii at rates that beat utilities.