Solar System Payback In Colorado [Video]

Interview with Cary Hayes of REC Solar at the Costco in Superior Colorado today. (This is just one question of many that I asked Cary. I broke up the video to make it easier to upload).

SolarDave: My friend’s system, which is 4 Kilo Watt system which seems to be an average size system, in Colorado how long until his system starts to payback?

Cary Hayes: Your friend’s system at 4KW, which means 4 thousand watts of DC power, that system with a good rule for thumb for every one kilo watt of power will produces about 125 kilo watt hours per month in Colorado, face some direction south and a good pitch angle.

His initial capital outlay will be repaying some where around 10 to 15 years. Now the payback on a solar system comes down to a variety of factors but the number one factor is electricity rates.

The electricity rates right now in Colorado for what Xcel charges is about 9.5 cents per kilo watt hour, what Xcel charges…

SolarDave: That is pretty cheap.

Cary Hayes: Some of the cheapest in the country. Compared to California, Hawaii, east coast, Chicago, from a nationwide perspective it is really cheap.

Xcel has asked for a 15% rate increase this summer that was just announced a few weeks ago, and we look back at the Xcel rates over the last 20 or 30 years, Xcel has raised rates 4.25% to 4.5% each year over the last say 30 years.

Historical average increases for this country are around 5.5% increase per year. So slightly more than inflation.

What we are starting to see in Xcel territory and other electricity vendors out there is the rise in cost of electricity. Rates are going up faster than the historic norm’s have been for a variety of reasons, increase energy costs across the board cost of gas, oil, coal.

It is fair to make the assumption that the costs are going to go up, it is a question of how fast. As the go up the payback on the solar system starts condensing. So if you are offsetting 9.5 cent kilo watt power today, rates go up 15% this year, 13% the following year, 5 years from now the cost might be 15 cents per kilo watt hour. Now you are offsetting 15 cents a kilo watt hour, which means you are saving that much more, which means you payback gets condensed.

So I think it is fair assumption to say in Colorado that a residential solar system will have a ten year payback. That is probably what we will end up with when we are all said and done.