We are often asked:
- Is solar for powering my home economically feasible yet?
- If I only plan to stay in this house 6-8 years does it make sense to invest in solar?
The answer to both of these questions is “it depends”. The primary factors that influence the cost-effectiveness of a solar investment are the cost of the array, incentives, maintenance, and savings. Costs can vary across Colorado as areas like the Front Range with lots of competition tend to have lower prices than more rural areas that lack that competition. In general, residential solar in Colorado costs $3/watt. An average home would require 5,000 watts of solar, so the upfront cost is about $15,000. Of course, there are various ways to pay for a solar array, so interest payments may be an additional cost.
As far as incentives, a 30% federal tax credit exists for solar systems through the end of 2019. In 2020, it decreases to 26%, and in 2021 it decreases to 22% before expiring completely. The tax credit is non-refundable, meaning it cannot exceed your tax liability in a given year, but it can carry forward from one year to the next. Most utilities no longer offer incentives for solar, but there are some exceptions in Colorado.
Very little maintenance is required on most solar arrays, especially if the array is fixed on a rooftop or mounted on the ground. In these cases, the system’s inverter may need to be replaced outside of its typical 10-year warranty period. A typical inverter for a home solar array may cost $1,500. Extended warranties are often available, however.
In terms of savings, the amount of savings a home will reap from a solar PV system depends on the amount of solar “insolation” falling on the array and the cost of electricity. A 5-kilowatt solar array in Colorado will generate an average of 8,000 kilowatt-hours per year. At an average cost of $0.11 per kWh, households can expect average annual savings of $880.
In summary, the answer isn’t straightforward and there are more complexities than what is described above. But typical home solar arrays throughout the state pay for themselves in 10-12 years. (Use CSU Extension’s online solar calculator to get financial details on a solar investment for your specific home.)
For those thinking of moving before the payback period is reached, it may be worth exploring whether your utility offers shares in a community solar garden. Those shares would allow you to get credit for a portion of the electricity generated from a large solar array located in your utility’s service territory, and often come at no upfront cost. Also remember that if you’re on the fence, solar often adds value to the home when selling. Perhaps the best question to ask when considering solar is “how bad do you want it”?