DENVER (CBS4) – A 4 On Your Side investigation found it will take decades for taxpayers to get their investment back on a $40 million solar project at the Denver Federal Center.

The project created jobs and will be good for environment, but experts are shaking their heads over the projected payback period. The government’s own estimate is 48 years. Experts say that is an unbelievably long time for taxpayers to recover their costs on the large project.

The panels are mounted on the rooftops of several buildings and more than a dozen carports.

“I just think there’s something wrong,” Nick Perugini with Bella Energy said.

The recently finished solar energy project will provide 15 percent of electricity for the Denver Federal Center, but is it worth it?

“It caught me off guard when you first said it, it still catches me off guard. It’s outside the industry norm,” RJ Harrington Jr. with the Colorado Solar Energy Industries Association said.

The government spent $40 million on the project. While Uncle Sam is content to wait nearly half a century, the business world won’t go solar without a much quicker return on investment, according to Harrington.

“We typically see paybacks, especially for commercial projects that are up to 10 years,” Harrington said. “The average is 5 to 7 (years). So a 48-year payback on a project, I said to myself, ‘What’s wrong with this picture?’ ”

The government project doesn’t take advantage of generous subsidies, tax credits, solar incentives, nor utility rebates. But commercial projects can use all of those to look better than they are.

“If you take those incentives away from the private sector, their payback period is going to be 48 years as well,” Scott Conner with the General Services Administration said.

Perugini is the solar energy advisor to a new hotel near Denver International Airport. He says without any subsidies the project would pay off in about 20 years.

“Quite honestly businesses and homeowners would not be going solar with a 48 year payback, and the truth is they are,” Perugini said.

Solar makes economic sense for the Hampton Inn because costs are coming down, according to general manager Marcelo Birckenstaedt.

“A few years back no hotel would have considered solar panels anywhere,” he said. “Now we’re the second hotel in the area that has those.”

With solar becoming more cost competitive, experts say it’s hard to understand why the government would settle for a 48-year payback period.

“I don’t know if I’ll still be around in 48 years,” Perugini said.

One expert refused to believe the payback period could be as long as 48 years, so he double checked the government’s math and says a more accurate number for the project should be 29 years. But the feds are claiming 48 years.

Either way the payback for the Federal Center solar project is way beyond what’s acceptable in the commercial marketplace, and taxpayers are footing the bill.

The $40 million project was paid for by federal stimulus funding.

Comments (14)
  1. Jeffrey Watson says:

    Ok something is fishy. It will save 300k per year in electrical savings at a cost of 40 million. That will take over 100 years of ROI. Is this before government subsidies or after, I would guess after.I see where windmills pay for themselves in 6 months. Just after the gov’t check clears When in reality they take 40-50 yaers to pay for themselves. If you”re appalled at the ROI for DIA, LOWRY, Federal Center solar panels. You would be shocked at the after subsidies from government payments..I do not know if these projections are before gov”t subsaidies. Please Blog if you know.

    1. Peter Boddie says:

      Please join us on Saturday, March 10, 1-3 PM as we post a message in protest of this government boondoggle. Our message: TRADE PANELS FOR PIPELINE.

      Here is more info.

  2. Pundit Pete says:

    One more thing. Pay back in 48 years?
    What do you think the chances are that those panels will still be working in 48 years. Or in 10 years for that matter?
    This makes me furious.

    Maybe a little sign would be a good idea. Kind of like what that crazy group is doing with the bridge down by SW Plaza near Littleton.

  3. Pundit Pete says:

    I agree with James.

    Come on. The surprising thing is that “RJ Harrington Jr. with the Colorado Solar Energy Industries Association” was surprised. Give me a break. I mean, even with a tax break solar panels don’t make sense.

    But the writing was on the wall, or roof in this case, for all to see when the President came to town three years ago to sign the Stimulus Bill at the Denver Natural History Museum. They made a big deal about the new solar panels on the roof, but were pretty vague about the cost.

    Those solar panels are all over the place at the Federal Center. I see them every day on the way to work and have been thinking about investigating them myself. Now, isn’t it comforting to know that similar projects are probably going on at Federal properties and buildings all around the country?

  4. James Powers says:

    And this surprises who???????

  5. Bill says:

    John T has a very valid point. They will never be paid back, since in 48 years they will all be obsolete and will have been replaced with newer, better stuff. So, that is just more money this Administration has wasted. But, at least the Feds are getting a shade under $1 million per year for the green energy credits they are selling to Xcel Energy. Read the GSA page about the Solar Park and it states that since Xcel has to meet 10% of all electricity being generated from green sources, we the taxpayers get to pay for the infrastructure and Xcel only has to buy the credits to qualify as meeting that much more of their mandated quota, yet they still get to overcharge the consumer for what they already paid for.

  6. John T says:

    There is no payback. It will all have to be replaced in 10-15 years. “Green Energy” is a fraud.

  7. Rich Mignogna says:

    These kinds of payback calculations are predicated on a number of parameters including what you believe about the future cost of electricity, the discount rate applied, etc. Without knowing more of the details, I cannot tell if this is a problem with flawed assumptions, a really bad deal, or someone who just can’t do the math… perhaps all of the above.

  8. rusty says:

    Tax payers are also footing the bill for the shorter payback times in the commercial marketplace. These federal projects and the tax subsidies paid for by the public are used to get the solar industry off the ground in this country. Much like the building of the interstate highway system.

  9. Rich Mignogna says:

    Yes, the anticipated payback on this is rather extreme. But, consider that since the government doesn’t pay taxes, tax credits are meaningless. Also, I don’t believe that the federal government should be able to take advantage of incentives funded by Colorado ratepayers through the Colorado RES. But, even without those, this payback seems suspiciously long. Did they simply pay too much for the panels?

  10. Poquito Mas says:

    Probably not the best return on investment from a financial basis. I don’t pretend to know why the system was installed or defend the decision to do so. I suppose the installation would help reduce polution and serve as an alternative energy demonstration project. But at least it has a return on investment. i’m trying to figure the ROI on the new SUV we have sitting in our driveway.

    1. jerry says:

      i would like to know what labor cost was , as in all construction…. labor is the largest part of the bill no doubt overpriced union labor was involved in this hoodwink

  11. roadbike says:

    I looked into solar for my house and was told the pay back with all the subsidies would be 20 – 25 yeas with a life expectancy for the solar panels of 20 – 25 years.

  12. LoCo Bob says:

    Your tax dollars (not) at work.

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