Tesla is increasing solar prices as supply chain costs are rising

Tesla increasing solar prices as supply chain costs rise

Tesla received the lowest solar rooftop installations last year since 2014. However, now it is seen that Tesla is significantly increasing the solar prices as supply chain costs continue to rise. According to Solar Energy Industries Association, the supply chain constraints pushed solar prices 18% higher in the US.

Tesla is increasing solar prices as supply chain costs are rising
Image credits- The Verge

The prices have crept up over the last year, but several potential buyers have notified us of a big price increase that appears to have been adopted by Tesla over the last week. Pricing a system in Southern California, right now, results in a price of $2.31 per watt.

When it is priced the same system for the same location last year, it shows a price per watt of $1.98 per watt, which is consistent with the rest of the industry having to raise prices, too. In 2021, Tesla’s solar deployment grew significantly (68%) for the first time in years; the company deployed 345 MW last year. This number includes both solar panel installations and solar roofs, which also saw an important increase in price last year. Tesla had big plans to significantly accelerate solar deployment, and while it increased last year, the magnitude that Tesla has been trying to achieve hasn’t materialized yet. CEO Elon Musk said that he expects Tesla’s energy business to grow as big or bigger than its automotive business.

Aside from the price increase, the supply chain issues are also affecting the actual availability of materials. It was previously reported that Tesla has started to delay solar installations because of supply issues. While Tesla ended its referral program for cars last year, the program remained for its solar roof and even increased its referral award to $500 – showing that the company is actively trying to secure more solar customers.

Increasing solar prices

The price increases vary by region. For instance, California’s CAISO stayed flat, while PJM & SPP increased 15% and 15.1%, respectively. Year-over-year pricing increases were immense – averaging 12.1% for all US regions. Texas’ ERCOT region saw the lowest increase of 6.9%, while SPP prices were up more than 20%.

A LevelTen developer survey suggests that the price increases began in early 2020 as a result of increased demand, macroeconomic fluctuations, supply chain issues, and a confluence of other factors. One might suspect that the increases in global electricity pricing are driving the ever-increasing demand for solar, but Bloomberg suggests otherwise – and their data follows. Bloomberg reports that 67 companies joined the RE100 last year – making for a total of 355 companies now committed to 100% renewable energy, totally offsetting their electricity use.