Colorado's electricity prices average $0.12/kWh, below the national average of $0.14/kWh.
From 2010 to 2019, the state's renewable power generation has doubled to about ¼ of net generation. In 2019 small-scale solar, including rooftop solar, accounted for more than ⅓ of total solar generation in the state. Colorado is a national leader in community solar projects or "solar gardens," with nearly 70 active installs generating over 50mW to-date.
Cost of a Solar Install
A graph of falling prices for a typical 5kW PV install in Colorado from 2006-2017. Figures include design costs. Data from Berkeley Lab, courtesy of Xcel Energy.
The average cost of a 5kW (equivalent to saving over 100 trees a year) solar power system starts around $17,500 in Colorado. Before any incentives, in the first year you’d save about $900, compared to if you had been paying the normal rates for the energy you used. These savings can continue for well over 25 years, improving with inflation.
Just How Much Can I Save With Solar in Colorado?
This depends on may factors such as your system size, power output, and financing. Here are the main ways you can finance your home solar power system, and the kinds of returns you may expect to see:
Out-of-Pocket
From our example above, the homeowner purchased a 5kW system to offset their energy bill. Overhead cost was $17,500, with a significant proportion returned in the first year through incentives, rebates, and savings, then paying itself in full over 11 years.
Most solar power systems have a warranty lifetime of 25 years. In that time, between incentives and paying lower rates you could make a profit of around $18,000 - equivalent to the up-front cost of the system!
Even with occasional maintenance or part replacement, that is a massive savings. Solar panel power output falls on average 0.8% per year, so with a little TLC and load management you can extend the life of your system well beyond the warranty’s expiration date, continuing to save indefinitely.
Solar Loan
Whether or not you can afford the up-front cost of the install, you may want to consider a Home Equity Line of Credit (HELOC). With equity in your home, or good credit, you may qualify for a 15-year solar HELOC with fixed rate of 4% or lower.
Starting with that same 5kW system costing $17,500 but with zero up-front cost, accounting for incentives, credits, rebates, and annual energy savings starting around $900, you could see a revenue surplus of about $5,000 at the end of the first year.
Save that money though. Your loan payments will likely exceed your power savings by about $50/month for the 15-year term. Once the loan is paid off, you can expect to save about $1,200 a year. Over 25 years you could expect to make about $13,000.
Power Purchase Agreement
With a Power-Purchase Agreement (PPA) the homeowner leases their roof to an outside party, usually a power company. Generally PPAs feature a fixed price per kWh, with either a fixed term or an annual escalator.
With a PPA, the cost of installation, repair, and maintenance to the homeowner is usually $0.00. For that 5kW system, with a PPA you could expect to save about $11/month on energy. Over a 20 years contract, you could see over $4,500 in revenue. That’s technically an infinite return!
PPA’s can be complicated, as you are effectively ceding at least some control of your home to the third party, but they are an excellent way to get into solar because they have no overhead.
