Company executives hope that will allow the company to tap into a much bigger pool of potential customers.
“It’s a solar roof, as opposed to a module on a roof,” Elon Musk, SolarCity’s chairman, said during a conference call. “It’s not a thing on a roof. It is the roof.”
SolarCity, at the moment, installs solar panels that are mounted on top of a customer’s roof. That limits its market to consumers with relatively new roofs unlikely to need repairs during the 20 to 25 years that a solar system is expected to last.
The new solar-roof product, which will be unveiled in the coming months, will integrate solar panels into the roofing material, allowing consumers to seamlessly add solar power to their homes at the same time that they replace their roof, potentially expanding SolarCity’s customer base by 30 percent to 40 percent.
That roofing product will be the first focus of the new solar panel factory that SolarCity plans to open by next summer in South Buffalo, Peter Rive, the company’s chief technology officer, said in an interview. The roofing product could account for between a quarter and a half of the production at the Buffalo factory, he said.
Combining solar with roofing has been tried before, without widespread success. Dow Chemical made solar shingles for five years, but it said in June that it would close the 130-employee business. Its shingles never were able to match the power-generating efficiency of conventional rooftop solar systems, according to GTM Research.
Without details or even pictures of what SolarCity’s integrated roof product will look like, analysts were cautious.
“This does sound like it could be a very differentiated product – one that addresses concerns on aesthetics and the challenges of the sales process to customers with old roofs,” Patrick Jobin, a Credit Suisse analyst, said in a report Wednesday.
But Jobin also said he was concerned that a roofing product that was combined with solar would be expensive, especially compared with conventional rooftop solar, which already has to rely on hefty government incentives to compete with much cheaper electricity generated by utilities using conventional means.
SolarCity is counting on the new integrated roofing product, along with a coming offering that combines solar panels with battery storage, to spur sales of its solar energy system. Its once-rapid growth has slowed and the residential solar market faces more intense competition and more regulatory hurdles in some states.
Rive, in an interview with The Buffalo News, declined to give a detailed description of the solar roofing product, deferring until the company formally introduces the new offering in the coming months.
Musk has said it is important for solar installers to have products that are seen as improving the look of a customer’s home.
“I think this will be something that’s quite a standout,” said Musk, who also is the CEO of Tesla Motors, which is offering to buy SolarCity for $2.6 billion.
SolarCity executives see the integrated roof product as a way to significantly expand the company’s pool of potential customers, with about 5 million Americans installing a new roof each year.
Because conventional solar energy systems typically last for 20 years or more, it’s important that they be installed on relatively new roofs that are unlikely to require repair or replacement during the life of the solar array.
That effectively eliminates millions of homes with roofs that are 10 to 15 years old, said Lyndon Rive, SolarCity’s CEO. About 10 percent of the residential customers who approach SolarCity about installing rooftop solar are turned down because of the condition of their existing roof.
“You don’t want to put solar panels on top of a roof you’re going to replace,” Musk said.
Peter Rive said the solar roof is designed to be “orders of magnitude more durable” than a conventional roof.
“What if we get your roof so it looks way better than a normal roof? What if you got up to a roof that lasts far longer than a normal roof?” Musk said. “It’s a different ballgame.”
©2016 The Buffalo News (Buffalo, N.Y.) Distributed by Tribune Content Agency, LLC.
