Does installing a rooftop solar system make financial sense?

Any time I am about to enter a big financial deal, my cynical side suspects I am about to get hosed.

This happened recently as I considered adding a solar rooftop system to my 1970s house.

My roof has southern exposure, and we recently cut down a big cottonwood that was in the way. Also, the market seems primed for solar. Equipment costs have dropped, dozens of solar businesses now provide necessary competition, and financing options have proliferated.

In Colorado, more than 30,000 photovoltaic systems are in operation, said Rebecca Cantwell, director of the Colorado Solar Energy Industries Association. In 2009, there were only 5,000.

The amount of solar energy being collected in the U.S. will quadruple from more than 24 gigawatts of total capacity now to nearly 100 gigawatts by 2020 — enough to power 20 million homes, according to the Solar Energy Industries Association.

The boom is likely related to new financial plans offered by solar leasing companies. But the one I was pitched ended up keeping me awake at night until I finally pulled the plug.

There are three common financial schemes to pay for solar installations.

The smartest move is to outright buy the system, which can cost between $15,000 and $21,000 and pay for itself in five to 10 years, according to experts. The homeowner gets tax credits, credit for selling energy back to the grid, and free electricity for the life of the system.

But that was too much money for me. Fortunately, there are also lease options.

A prepaid lease allows the homeowner to purchase at a set price the power expected to be generated over the life of the 20-year lease. The company owns the system and provides maintenance.

The most popular mechanism is the zero-down lease, which is what I considered.

The homeowner puts no money down and the company owns the system, provides maintenance, collects the power and gets the tax benefits.

The customer incurs a monthly payment offered at a price lower than the utility’s rate. Generally, the payment has built-in increases over the lease’s term.

My deal had a 2.9 percent annual increase for 20 years.

The salesperson told me the increase is vastly lower than the expected 8.5 percent annual increase from Xcel Energy.

Whoa. An 8.5 percent increase?

I checked with Xcel spokesman Mark Stutz on that figure. “Not even close,” Stutz said. From 2008 to 2017, the average residential Xcel bill will have gone up about 1.9 percent a year — from $64.83 in 2008 to an expected $74.82 in 2017, he said.

The solar salesman scoffed when I relayed what Stutz said, adding that utilities tend to hide their increases in other ways.

All of this may be true. Frankly, I don’t know what to believe. Nevertheless, with my wary financial antenna abuzz, I backed out.

No question solar increasingly makes sense if you have a good roof that faces south and plan to stay in your house for a while.

Electric bills surely will rise, but by how much? Will they outpace a solar lease?

Will technology advancements continue to make solar cheaper? What will the federal government’s Clean Power Plan do to rates? What about when natural gas prices begin to rise?

There is one certainty, however. The sun will come up tomorrow. On that, you can bet your bottom dollar — with or without a lease. E-mail Jeremy Meyer at jpmeyer@ denverpost.com. Follow him on Twitter: jpmeyerdpost