As Colorado Springs homeowners, you may be weighing the pros and cons of installing solar panels on your property. This article aims to provide a financial perspective on whether solar is a good investment for you. We'll cover key factors like local electricity costs, sunshine days, and the best payment options for solar panels.
Financial Perspective on Solar Panels
Electricity Costs in Colorado Springs
Here in Colorado Springs, our electricity is relatively inexpensive compared to many other parts of the country. The average residential rate is about 13 cents per kilowatt-hour (kWh). This lower cost means that the payoff time for solar panels is longer compared to areas with higher electricity costs.
Impact of Renewable Energy Transition
As Colorado Springs Utilities continues to shift towards more renewable energy sources, the financial case for solar panels will become clearer. Increased reliance on renewable energy might lead to higher utility rates, making solar panels a more attractive investment, ironically.
Impact on Home Value
Homes equipped with solar energy systems are often thought to be valued higher and sell faster than those without. However, in our experience at The Johnson Team, most homebuyers do not currently view solar panels as a benefit worth paying a premium for. We help our buyers estimate the value of solar panels, but one can't rely on the buyer's agent when they go to sell their home to do the same. Unfortunately, there isn't enough data available yet on sold listings with solar to look at what is happening in the Colorado Springs market empirically. What we can tell you, though, is to not count on your solar panels being a selling point, at least not without speaking with us first.
Sunshine in Colorado Springs
We hate to break it to you, but the old saying that Colorado Springs gets 300 days of sunshine per year is a myth. In reality, we receive about 247 days of sunshine annually, which is still plenty for solar energy production and even slightly more than Denver's 245 days. With this amount of sunshine, most homes can offset the vast majority or even the entirety of their electricity consumption with solar panels.
Payment Options for Solar Panels
Upfront Payment
If you are certain you will be in your home for the long haul (15+ years), purchasing solar panels upfront might be the best option. This approach maximizes long-term savings but requires significant initial investment and carries the greatest financial risk. That's why we rarely advise going this route. The truth is, most of us are terrible at estimating how long we will live in our current situation. Life changes, and we like our clients to have the flexibility to change with it. If you're one of the few who feels confident enough about your long-term plans to consider purchasing solar upfront, we would encourage you to weigh this against other potential investments in your home, such as new flooring, a kitchen remodel, or enhancing curb appeal, which might also increase your home equity and daily enjoyment. Once you make the purchase, you're stuck with it. Read on for a less restrictive option.
Leasing
For most of our clients who are uncertain about their long-term plans, leasing solar panels is typically the best method. Leasing involves lower upfront costs and offers flexibility since the lease can be transferred to a home buyer. While the total financial benefit is less than purchasing, due to lease payments offsetting utility savings, it prevents you from investing more in solar panels than you add in home equity. This method gives you the chance to have that positive environmental impact without absorbing the financial risk single-handedly. It's important to note, though, that not all solar panel lease agreements are transferrable, and those that are may have stringent credit requirements, which could exclude some potential buyers of your home.
Other Considerations
Environmental Benefits: While this article focuses on the financial aspects, the environmental benefits of solar panels are significant. Reducing your carbon footprint and contributing to sustainable energy are important factors to consider based on personal values.
Utility Bills: Keep in mind that even if your solar panels produce enough energy to cover 100% of your consumption, you will still have a utility bill for daily grid connection costs and other associated charges.
Tools and Resources
To evaluate your own home's potential for solar energy, you can use tools like Project Sunroof and the Colorado Springs Utilities Solar Customer page. These resources can provide personalized estimates and help you understand your unique options better.
Get Help from The Johnson Team
At The Johnson Team, we are happy to assist you in evaluating your solar options. Gather your most recent 12 months' energy bills (which can be found online for all major area energy providers) and reach out to us. We're here to help you make an informed decision that aligns with your financial goals and personal values.
Above all, please don't buy solar (or maybe anything else) from a door-to-door salesperson. If you like what they have to say, give us a call anytime so we can discuss it more before you sign on any dotted lines.
