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 electric cars to a home energy storage system called the Powerwall.

Starting in 2012, Tesla installed prototype battery packs (later called the Powerpack) at the locations of a few industrial customers.

[8] 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.

[9] Brothers Peter and Lyndon Rive, the cousins of Tesla CEO Elon Musk, founded SolarCity in 2006 to sell and install solar energy generation systems as well as other related products and services to residential, commercial and industrial customers.

[26][27] Members of the anti-Tesla group TSLAQ have cited Musk's fake solar roof tile reveal as a major point of contention and an impetus for organizing.

[28] 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.

[29] The factory was not able to start producing the shingles in volume until March 2020[30] and Panasonic left the joint venture in early 2020, before it exited the solar business entirely in January 2021.

[36] 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.

[37] 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.

[39][40] Tesla Energy's business model is based around making their systems "the lowest-cost solar in the United States".

[41] Tesla says the business model was enabled by eliminating door-to-door sales, advertising, and some complex financing instruments (like leases).

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.

[30] 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.

Like the Powerwall and Tesla's cars, the solar inverter is capable of receiving over-the-air updates through built-in cellular connectivity.

The current generation Powerwall 2 is capable of storing 13.5 kilowatt-hours for solar self-consumption, time of use load shifting, and backup power.

The Powerwall+ combines the functions of a Powerwall 2, the Tesla Solar Inverter and a Backup Gateway (a system controller and transfer switch).

The Tesla Megapack is large-scale rechargeable lithium-ion battery energy storage devices intended for use by a business or an electric utility company.

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 Tesla Powerpack was a large-scale rechargeable lithium-ion battery energy storage device intended for use by a business or on smaller projects from power utilities.

For large-scale customers, Tesla Energy operates an online platform which allows for automated, real-time power trading, demand forecasting and product control.

[86][87] After allegedly informing management, including CEO Elon Musk, of these incidents, the employees were fired, which they argue contravenes California's whistleblower protection laws.

[89] 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.

[90] 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 power optimizers built by SolarEdge.

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."

[98] 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.