Tesla updates solar panel rental contract to make it more fair for consumers

Tesla has updated their Energy Subscription Agreement to cap remove costs

Update April 15, 2020: Tesla has updated their Energy Subscription Agreement to reflect the reinstatement of a fixed price to remove rented solar panels ($2,500).

Thank you to Tesla for updating their agreement. Having fair agreements for consumers is important for the overall health and integrity of the residential solar industry.

While buying solar panels is going to be the best long-term investment for most consumers, the option to rent solar panels helps to make solar more accessible. Given this update, it is no longer necessary for consumers to avoid their rental program. 

The article below is our original call to Tesla to update their solar panel rental contract.

We here at SolarReviews have always supported and admired Tesla. They have done more to advance the fight against climate change than any other company in history.

However, we believe recent changes and some existing vague language in their solar panels rental agreement have the potential for unforeseen liability for consumers. As such, we are warning consumers not to sign the document in its current form.

We hope this warning will lead to the terms of this agreement being updated to include any of the following:

• Cap subscription price rises

• Cap the amount the consumer has to pay in order to remove the solar panels and terminate the agreement

• Make it explicitly clear that a consumer can cancel their monthly subscription without needing to remove the solar panels from their roof

The problem with Tesla's solar panels rental agreement

As it currently stands, Tesla can change the monthly subscription fee to as much as they like and a consumer's only redress is to cancel the agreement.

Tesla claims that you can cancel the subscription without having to pay to have the panels removed from your roof. However, this is not explicitly promised in the Tesla Energy Order Subscription Agreement, the agreement you sign when you rent the panels.

The relevant part of the contract says:

"If the System needs to be removed for any reason, such as your cancellation or for roof repairs, you agree to give Tesla reasonable access to your Home to remove the System at Tesla’s convenience and availability. Tesla will provide you with a competitive quote to complete the removal upon your request to MyProject@tesla.com."

Given there is no other mention of this issue in the agreement, it would imply to me that if you reject a fee increase in the only way the contract allows, by canceling, then the panels must be removed and the consumer must pay what Tesla quotes to do this.

If this is not Tesla's intention, they should add a line to the agreement saying:

"For the avoidance of doubt, you can cancel your subscription without being required to pay to remove the solar panels from your roof. You can simply leave them on your roof turned off for as long as you like."

Will local installers remove the panels if Tesla's price is too high?

In addition to the issue surrounding when a removal fee will be payable, there has also been a quiet change to how this fee is calculated: there is nothing in the contract that limits how much Tesla can charge you to remove the panels.

It’s worth noting that you have the right to get another quote for the removal. However, in practice, local solar companies will most likely charge a fortune to remove a Tesla system. Why? They compete with Tesla to sell solar in their local market and the last thing they want to do is help someone who chose a national company over them in the first place.

Even if you were to get a fair quote from another licensed solar installer, it is unlikely that they would pack up the equipment and send it back to Tesla for you.

The agreement states that Tesla also has to give approval for panel removal. Unfortunately, there is nothing stated about who they may or may not approve.

This puts you in a position where you will probably have to accept whatever price Tesla chooses to charge you for the removal.

All caps are off - there's no limit to what Tesla can charge you

Our concern is that this clause could be used to "effectively lock you in" for the long term even though you are not "legally locked in". This goes against the whole reason for developing the rental model.

The agreement was not like this when Tesla launched the solar panels rental program in August 2019.

At that time, the removal cost was capped at $1,500. This way, a consumer knew upfront what it would cost if they ever wanted to terminate their agreement. As it currently stands, consumers are not aware of the changes that have been made.

This problem could be fixed, so long as any and all increases to the monthly rental fee and the cost to remove the system are capped, with all of these details communicated to the consumer at sign-up (as it was when they first released the solar panels rental agreement just a few short months ago).

Background of the Tesla Solar Panels Rental Program

On August 16, 2019, we, along with most in the renewable energy industry, applauded the launch of the Tesla solar panels rental program.

The program rents solar panels to consumers on a monthly subscription. Tesla promoted that the main advantage of the rental program over Tesla's other zero-down solar offerings was that there was no long-term contract. You can hand the solar panels back whenever you like!

At the time, SolarReviews took a look at the Energy Order Subscription Agreement, the contract for the Tesla solar panels rental.

We didn't like that Clause 3 allowed Tesla to change their monthly subscription amount whenever they like, by however much they like. We felt that a solar agreement should have little to no price escalation being that consumers’ savings increase over time, as electricity prices rise.

The only remedy a consumer would have in response to a ridiculous increase in the monthly subscription fees would be to terminate the agreement. The original contract stated that if the consumer terminates the agreement, they will need to pay a removal fee of $1,500.

We thought this was fair. Tesla would not make much (if any) profit from the removal of the solar panels at $1,500, effectively discouraging Tesla from aggressively raising its monthly subscription fee, even if Clause 3 of the agreement allowed them to do so.

We acknowledge that to offer this type of short-term rental product for solar panels, Tesla needed some form of protection from people signing up for short periods of time. It is expensive to permit and install solar panels on a home and it is nearly just as much work to remove them and restore the roof.

As such, we thought $1,500 was a fair fee for removal.

We at SolarReviews were very excited to see a viable and fair solar rental offering in the market because so many people don't go solar (even though it is profitable for them to do so) because they do not know how long they will stay in their current home.

The first change to the Tesla Solar Panels Rental Program agreement

In September 2019, just a few weeks after the launch of the Tesla solar rental program, the company announced that it would be waiving the $1,500 removal fee for anyone who subscribed in the month of September. 

Here is an excerpt from the Energy Order Subscription agreement taken from the Tesla website in September 2019:

"System Removal. If the system needs to be removed for any reason, such as your cancellation or for roof repairs, you agree to give Tesla reasonable access to your Home to remove the System at Tesla’s convenience and availability. Tesla will remove the system at no cost to you. Tesla, or one of our subcontractors, will patch and seal all roof penetrations associated with removal of the System. Tesla shall have no obligation to repair any ordinary wear and tear on the home, or to provide any replacement parts. You may not modify or remove the system without written consent from Tesla."

Note: "Tesla will remove the system at no cost to you".

While this seemed great for consumers, it was unrealistic for Tesla because they could spend thousands of dollars installing solar panels on a home and then be asked to remove them only a few months later.

After the promotional period, one might have thought that Tesla would have restored their original $1,500 removal fee. However, they wound up taking a much more aggressive approach. 

The second change to the Tesla Energy Order Subscription Agreement

In the latest version of this agreement that appears on Tesla's website as of April 6, 2020, Clauses 3 and 7 read:

"3. Changes to Subscription Price. Your Monthly Subscription Payment is subject to change. If your Monthly Subscription Payment is changed, Tesla will provide you with an updated Price Sheet electronically and/or through your Tesla portal. If you do not reject the updated Price Sheet within thirty (30) days and cancel your subscription, your next invoice will reflect the updated pricing."

"7. System Removal. If the System needs to be removed for any reason, such as your cancellation or for roof repairs, you agree to give Tesla reasonable access to your Home to remove the System at Tesla’s convenience and availability. Tesla will provide you with a competitive quote to complete the removal upon your request to MyProject@tesla.com. Tesla, or one of our subcontractors, will patch and seal all roof penetrations associated with removal of the System. Tesla shall have no obligation to repair any ordinary wear and tear on the Home, or to provide any replacement parts. As an alternative, you may choose to have a similarly qualified service provider remove the System from your Home at your expense. If the System is damaged as a result of the removal, you may be responsible for all costs to repair or replace the System. You may not modify or remove the System without written consent from Tesla."

So, there is no cap on monthly price increases and no cap on how much Tesla can charge you to remove. It is simply a "competitive quote."

However, given the fact that other qualified solar companies are likely to charge a fortune to remove a Tesla system, this competitive quote could, in fact, cost far more than you think.

A suggestion for a better result for Tesla and its customers

If, as Tesla has claimed publically, clients can cancel their subscription and not pay to have the panels removed, then this should be clearly stated in the contract.

In our opinion, a court would most likely interpret the current agreement as: your cancellation of the subscription would require you to pay to have the panels removed. It would come down to how the court interpreted the words, "If the system needs to be removed for any reason, such as cancellation."

Tesla can ignore the issues laid out above but once they are in the public domain and consumers become aware, their rental offer will become less popular.

There are some other issues we have with the agreement, such as a reference to the consumer having the right to buy out the panels but no concrete way to determine at signing what such a future buyout price might be.

Again, this is something consumers should be concerned about if they were hoping to one day buy out their rented Tesla solar panels.