The paper presents economic analysis of a 1.2 MW capacity grid-connected photovoltaic (PV) power plant installed at the Colorado State University-Pueblo, in December 2008. The project was commissioned by a regional utility company as per the renewable energy portfolio standards guidelines of the state. The system is installed on the customer's property funded by a third party investor. The investor will receive tax credits and rebates in addition to monthly revenue from the energy sales. Array efficiency is used to measure the performance of the PV system and predict the amount of energy generation and resulting cash flows. Based on the project investment, costs and revenues, an economic model of the project is proposed. Economic analysis of the PV installation is performed using Microsoft Excel 2007 and validated by the RETScreen software. It is identified that the cost of the PV system, financial assistance program, and energy pricing are crucial for the economic viability of PV project in addition to a favorable climatic condition. IRR of the project is 10.7% for the given tax credits and rebates. At least 4% tax credit is required to have a breakeven of the project. Different economic scenarios were analyzed, and price of the PV generated energy at different levels of tax credits and IRR is presented. This analysis is applicable to large size customers who want to invest in or own a PV plant in the US. The economical model could be applicable to other regions to devise investment option instruments. The current cost scenario presented in the paper provides readers a notion of cost improvement witnessed by PV system in last four years. Published by Elsevier Ltd.