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Tesla Energy Operations, Inc. is the clean energy division of Tesla, Inc. that develops, manufactures, sells and installs photovoltaic solar energy generation systems, Energy storage products and other related products and services to residential, commercial and industrial customers.
The division was founded on April 30, 2015, when Tesla CEO Elon Musk announced that the company would apply the battery technology it developed for to a home energy storage system called the Tesla Powerwall. In November 2016, Tesla acquired SolarCity, in a US$2.6 billion deal, and added solar energy generation to Tesla Energy's business. This deal was controversial; at the time of the acquisition, SolarCity was facing liquidity issues.
The company's current power generation products include (manufactured by other companies for Tesla), the Tesla Solar Roof (a solar shingle system), and the Tesla Solar Inverter. The company also makes a large-scale energy storage system called the Tesla Megapack. Additionally, Tesla develops software to support its energy products.
In 2023, the company deployed solar energy systems capable of generating 223 megawatts (MW), a decrease of 36% over 2022. In 2024, it deployed 31.4 gigawatt-hours (GWh) of battery energy storage products, an increase of 113% over 2023. The division generated $10.1 billion in revenue for the company in 2024, a 67% increase over 2023.
The Tesla Energy brand was introduced on April 30, 2015, as CEO Elon Musk announced that the company would apply its battery technology to a home energy storage system called the Powerwall. Five hundred pilot units were built at the Tesla Fremont Factory in California and installed during 2015. The Giga Nevada factory started limited production of Powerwalls and Powerpacks in the first quarter of 2016 using battery cells produced elsewhere, and began mass production of cells in January 2017. This battery technology is not an innovation of what is available in the market but, according to Musk, the company offered a product that is easy to install, more attractive, less expensive and can also be easily maintained.
In June 2014, SolarCity committed to building a second factory, later called Giga New York, in Buffalo, New York, that would build photovoltaic cells and would be triple the size of the next largest photovoltaic manufacturing plant in the United States.
By 2016, SolarCity had installed solar energy systems for over 325,000 customers and was one of the largest solar installation companies in the United States.
On August 1, 2016, Tesla announced that it would be acquiring SolarCity in an all-stock $2.6 billion acquisition. Tesla's mission since its inception has been "to accelerate the world's transition to sustainable energy". Musk said the purchase would advance Tesla's mission by helping the world move from a mine-and-burn hydrocarbon economy towards a solar electric economy. The announcement cited (as benefits of the acquisition) operational and cost synergies, as well as allowing for integrated sales of products from Tesla's existing battery energy storage products division. The announcement of the deal resulted in a more than 10% drop in Tesla's stock price.
The proposal for acquisition was approved by antitrust regulators in August 2016. More than 85% of of Tesla and SolarCity voted to approve the acquisition on November 17, allowing the deal to close on November 21, 2016.
The Solar Roof was to be made at the Giga New York factory, which opened in late August 2017 and would be operated as a joint venture with Panasonic. The factory was not able to start producing the shingles in volume until March 2020 and Panasonic left the joint venture in early 2020, before it exited the solar business entirely in January 2021.
In mid-2017, several of the former SolarCity executives left the company. Chief policy officer John Wellinghoff departed in April 2017, co-founder Lyndon Rive left in June 2017, and his brother Peter left shortly thereafter.
SolarCity heavily focused on door-to-door sales of leased systems, where customers would pay no upfront costs, but agree to purchase the power generated by those panels from the company for 20 years. Leases became the most popular solar business model in the US and made SolarCity the largest residential installer, but left the company over $1.5 billion in debt by 2016. SolarCity's leases were also criticized by consumer advocates and government regulators.
Tesla Energy's business model is based around making their systems "the lowest-cost solar in the United States". , the company sells systems at $2 per watt for solar panels before federal tax credits. Tesla says the business model was enabled by eliminating door-to-door sales, advertising, and some complex financing instruments (like leases). The shift in business model has been blamed for diminished customer support. Customers said they waited weeks for replies to emails and experienced long delays for administrative steps to be completed.
As a result of the shift in business model, total solar installations declined after the Tesla acquisition. In the second quarter of 2019, Tesla quarterly installations fell to a low of 29 megawatts, compared to SolarCity's installation of 253 megawatts in the fourth quarter of 2015 (before Tesla acquired it), and compared to 2,013 megawatts the residential leader Sunrun installed. Analysts believe that SolarCity was "a big source of the cash-flow deficit" for Tesla in 2019.
In 2022, the company deployed solar energy systems capable of generating 348 megawatts (MW), an increase of 1% over 2021, and deployed 6.54 gigawatt-hours (GWh) of battery energy storage products, an increase of 62% over 2021. The battery figure was helped by the output of the company's Megapack factory in Lathrop, California, announced in October 2021. The division generated $3.91 billion in revenue for the company in 2022, a 40% increase over 2021.
The company focuses primarily on residential customers who purchase the system with cash or financing. Tesla Energy also offers systems to commercial customers in California.
Tesla Energy does not have a lease program like SolarCity, but between August 2019 and May 2021, it offered "subscription" systems to customers in Arizona, California, Connecticut, Massachusetts, New Jersey and New Mexico, in a plan to boost residential solar deployments. As opposed to a lease, customers did not need to sign a long-term agreement and may ask Tesla to deactivate the system at anytime with no penalty; Tesla charges a flat fee to remove the system.
Tesla uses proprietary mounting hardware on rooftops that eliminates the need for mounting rails and uses skirts that hide the hardware and make the panels appear to be flush with the roof. SolarCity acquired the mounting technology when it purchased Zep Solar in 2013. The "railless" system allows installers to install solar panels on the roof more quickly than other installation approaches. Traditionally, solar panel installation requires workers to first outfit roofs with mounting rails and then attach solar panels to those rails.
A report released in March 2023 estimates that Tesla has installed approximately 3,000 solar roofs in the U.S. since the launch of the product in 2016, far below initial sales projections. Other reports indicate that homeowners who sign up for the Solar Roof often get put on long waitlists.
The most recent version of the inverter was introduced in May 2023 and comes in four sizes: 3.8 kW, 5 kW, 5.7 kW, and 7.6 kW of AC power output. Each has four maximum power point trackers and an efficiency of 98%.
The prior version of the inverter came in two sizes: one with 3.8 kW of output, two maximum power point trackers and an efficiency of 97.5%, and the other with 7.6 kW of output, four maximum power point trackers and an efficiency of 98%. The inverter can connect to WiFi and link with the Tesla app, allowing users to monitor energy production and update the inverter's firmware.
Tesla's Powerwall+, introduced in April 2021, includes an integrated Tesla Solar Inverter.
A Powerwall system can be composed of up to 10 Powerwalls, including a combination of Powerwall+ and traditional Powerwalls. In areas where building codes allow, up to three of these devices may be "stacked" front to back to take up less space.
The Powerwall+ combines the functions of a Powerwall 2, the Tesla Solar Inverter and a Backup Gateway (a system controller and transfer switch). The combination simplifies installation and allows for even greater power delivery during periods of full sun.
The Megapack is capable of storing up to 3 megawatt-hours and is built as a containerized product intended for use by utility companies, typically as part of a battery storage power station, and can be used for renewable energy supply smoothing, voltage support, capacity support, microgrids, frequency regulation, and voltage control.
The Powerpack is capable of storing 232 kilowatt-hours and is intended for use by businesses or for smaller utility company projects and can be used for peak shaving, load shifting, backup power, demand response, microgrids, renewable power integration, frequency regulation, and voltage control. The first prototype Powerpacks were installed in 2012 at the locations of a few industrial customers. After July 22, 2022, the product was no longer listed for sale.
At around the start of the lawsuit, it was revealed that Tesla had initiated a secretive program, "Project Titan", to replace solar panel parts that could cause fires. Former employees said that Project Titan involved replacing two parts believed to be causing the fires: the connectors between the panels made by Amphenol and the built by SolarEdge. Tesla said that it believed Project Titan was successful in addressing issues with the connectors and their higher rate of failure.
On November 9, 2019, it was announced that Walmart and Tesla had settled their lawsuit. A joint statement provided by Tesla stated the companies were "pleased to have resolved the issues raised by Walmart" concerning the installations, and looked forward to "a safe re-energization of our sustainable energy systems." The terms of the settlement were not disclosed.
In August 2017, limited production of tiles for the Solar Roof began at the company's Giga New York factory in Buffalo, New York. After testing on employees' roofs, Tesla announced in January 2018 that it would begin installing the product "within the next few months", but by July 2019, the company had only completed about a dozen roofs. In October 2019 it was reported that Tesla was "still tinkering with the product three years after announcing the concept, having done trial installations with two different iterations so far." The second version turned out to be too expensive for Tesla to manufacture in volume. Tesla was only able to start producing the Solar Roof in volume in March 2020.
On April 11, 2021, Tesla sent a message to many customers who had pre-ordered their roofs (including customers who had signed contracts well over a year prior) informing them of a cost increase of about 30% for all projects, including some that already had an agreed-upon start date. Tesla said that it would "be prioritizing customers based on the order in which they accept their updated agreements," potentially adding time for customers who had been waiting for months or a year for a new roof.
On April 26, 2021, Elon Musk admitted that the company made "significant mistakes" in their solar roof tile project, including that they did not anticipate the trouble of "assessing the difficulty of certain roofs as complexity of roofs varies".
Facing a class-action lawsuit filed by Solar Roof customers, Tesla revealed that it planned to let some customers who had signed contracts before the April 2021 price changes revert to their original price.
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