But capitalizing on the falling price of solar panels has been difficult for an industry that continues to struggle with other high costs such as labor.
Technological advancements in rooftop solar will help push overall industry sales from $3 billion in 2016 to $38 billion by 2025, Navigant projects. And by offering consumers a variety of solar system options, industry executives believe they will have an increased ability to compete with the price of electricity produced by utilities.
One style of the line of solar tile roofs that Tesla and SolarCity plan to manufacture, shown on a "Desperate Housewives" home at Universal Studios Hollywood.
Price and styling will likely prove critical for the industry in attracting customers as current solar power owners have seen some of the benefits of self-generating electricity erode. Utility companies have complained that solar owners haven’t been paying their share of the cost to maintain the network of power lines, substations, transformers and power plants that make up the electric grid.
Regulators across the country have added costs to solar power owners such as higher rate tiers and mandatory fees that have increased per-household costs by as much as $10 to $20 a month in California, Del Chiaro said.
In some states such as Florida, utility companies have fought the growth of rooftop solar with ballot initiatives that protect their monopolies on centralized power while penalizing solar owners.
Virtually all quarters agree that the real future for solar — and much of the energy industry — depends on electricity storage, which banks solar power for when the sun isn’t shining. The cost of electricity storage is high but, as with solar panels, is dropping rapidly.
Several solar companies in recent months have announced partnerships with storage companies to offer a package to consumers. Still, it remains too pricey for the average consumer.
“All of these strategic alliances are smart,” Del Chiaro said. “They’re critical. We basically have to sell solar packaged with storage.”
Last week, residential solar giant Sunrun Inc., based in San Francisco, said it had entered an agreement with South Korea’s LG Chem, the world’s largest supplier of automotive batteries, to offer home energy storage to consumers.
In July, Musk’s Tesla Motors offered to buy SolarCity for more than $2 billion. As a battery maker, Tesla combined with SolarCity gives the company its own version of a storage and solar partnership.
Tesla is expected in November to finalize its acquisition of SolarCity, which is run by Musk’s cousins Lyndon Rive, who is chief executive, and Peter Rive, the chief technology officer.
But Musk, with his flamboyant style, did not stop there. Instead, he is looking to one-up his competition.
Musk is working to build a personal alternative energy ecosystem connected by software and harmonious design, all under the Tesla brand name. The idea is that green-minded homeowners will mix with performance-oriented automotive geeks at Tesla retail stores to shop for electric cars, charging stations, solar rooftops and wall-mounted batteries for energy storage, available separately but designed to work best as a system.
Friday’s solar roof unveiling also included an upgraded Powerwall, Tesla’s sleek wall-mounted home battery, which can store roof-generated solar energy for household uses and recharge the Tesla in the garage.
During an August conference call with analysts, Lyndon Rive all but bet the announcement would trigger growth in SolarCity sales as the company lures homeowners off the sidelines with its new design. Rive noted that 5 million U.S. homes get new roofs each year — “a really big market segment” that won’t cannibalize sales of SolarCity’s traditional product.
Revenue during the first six months of the year almost doubled that of the same period in 2015, but the company’s net loss for 2016 was more than $230 million higher.
SolarCity’s value is far from its February 2014 high of $84.96 per share. The company’s stock price hovers around $20 a share now.
Julien Dumoulin-Smith, an analyst with UBS who focuses on electric utilities and alternative energy, said new products and flashy presentations are less important to SolarCity than the fundamentals.
“What they need to do is bring down the costs,” Dumoulin-Smith said. “The meat and potatoes issues for this company are much more pressing.”
In an effort to curb costs, SolarCity and home-sharing company Airbnb this month announced a partnership under which Airbnb hosts and renters are eligible for a rebate of up to $1,000 on solar panels through SolarCity. In addition, SolarCity customers who become Airbnb hosts receive a $100 travel credit.
With this kind of partnership, solar firms reduce the cost of customer acquisition, a large expense.
Solar firms also have been adding financing options other than the leasing model that was a signature strategy of SolarCity.
In June, SolarCity said it had begun offering 10- to 20-year loans to customers that would allow homeowners to gain the benefit of government incentives the leasing programs did not offer. The loan program allows homeowners to own the panels without huge upfront costs and receive the 30% federal tax credit — an incentive SolarCity and other solar leasing companies claimed themselves since they still owned the solar panels.
For Musk, who just reported a surprise quarterly profit at Tesla, design has always been supreme.
The company had fashioned its Powerwall home storage batteries with lines that complement the silhouette of a Tesla Model S; but to Musk, SolarCity’s solar panels looked like the same commodity products every other solar installer was selling.
He pushed the company to make the product not only cheaper and more energy efficient, but also better looking.
"This needs to be an asset to your house,” he said, repeating it in public appearances over the past few weeks. “It needs to be so good that when it's done you call your neighbors over to show them how proud you are.”
The new Tesla-SolarCity roof tiles will be available next summer, Musk said Friday, with rollout starting in California. He didn’t give details about cost or efficiency.
Musk says he spends most of his time on engineering and design, and on Wednesday emphasized the essential relationship between the two in a conference call with stock analysts.
“It’s important to have tight control over the production of solar panels … to have a beautiful roof product,” he said. “We’ve got to be able to iterate rapidly and have them made exactly how we want them.”
A 2014 survey by home-solar power provider Lumeta found that slightly under a third of respondents considered appearance very or extremely important, while slightly over a third said the look was slightly important or not important at all.
“People spend a lot of time trying to create an attractive home,” said Andy Ogden, chairman of the industrial design graduate program at the ArtCenter College of Design in Pasadena. “They don’t want funny glass boxes stuck on one side of their roof.”
Making solar roofs more attractive, he said, “increases the number of people who will install solar.”
