According to the latest data from Tesla’s fourth-quarter 2023 financial report, its once-leading solar energy business is declining. The automaker revealed on Wednesday that its solar power deployment decreased by 36% last year, totaling 223 megawatts, down from 348 megawatts in 2022.
While high interest rates have slowed solar growth in some markets, Tesla's curtailment comes amid a record year in the U.S., which will see 33 gigawatts of new solar capacity added in 2023, according to estimates from solar industry group SEIA.
It's been a bad year for Tesla Solar, the worst year since 2020. If you zoom in, the last quarter of 2023 looks even worse.
Tesla's solar deployment fell 59% year-over-year in the fourth quarter of 2023, from 100 megawatts in the fourth quarter of 2022 to 41 megawatts. The company offered no other explanation for the wattage decline other than blaming interest rates. At least part of the reason may be Tesla's strategy shifting from installer to supplier. According to Electrek, the automaker laid off some of its own solar installers last year and canceled many scheduled "solar roof" installations. Tesla acquired SolarCity more than seven years ago for $2.6 billion.
In addition to its solar energy business, Tesla's power generation and energy storage businesses are booming. The company said its energy storage deployments, including Powerwall home batteries and utility-scale Megapacks, will reach 14,724 megawatt hours (MWh) in 2023, up 125% year-on-year.
Despite the overall boom, Tesla said it expects some fluctuations in energy deployment from quarter to quarter, and the company's fourth-quarter results showed this. The company deployed 3,202 MWh of energy in Q4 2023; that's down compared to the previous three quarters, but up if compared to the same period last year (Q4 2022).
Tesla’s residential solar business is not as big as it once was. However, commercial and household batteries still play a key role in the transition to renewable energy, as they can store intermittently available clean energy for later use. Such batteries could also help communities and even entire islands and states prepare for extreme weather, reducing peak demand on the grid and providing backup energy during power outages.