Electric Bill Before Solar
Electric Bill After Solar
Est. Solar Payment
First, take a look at a typical electric bill before considering solar power. That's a nasty outlay of cash. Imagine what you could do with all that immediate savings above every month.
As a result of what the state legistlature has accomplished, you can instead save a bunch of cash. Imagine getting this bill in the mail instead. Whew!
Now, while you have a drastically cut back power bill, you now have a solar lease payment. Essentially, you're renting out your rooftop to a company who then pimps it out with solar panels. Then, you pay a lease payment to them for the power it produces. In each case, this payment added to your existing power bill will be lower than your previous bill, netting you instant savings with nothing down out of pocket! How awesome is that?!
Leasing vs. Buying If you decide not to go with the leasing option, we've calculated the amount of time it would take for your home solar panel system to pay for itself if you put up the cost of the install out of pocket or financed it yourself. This calculation (see the bottom of the page under "5kw Solar System Purchase Payback Time") takes into account all the rest of the incentives below, and assumes you meet all the criteria to take advantage of them (e.g. - having a tax appetite, south facing roof with limited shade, etc.)
40% by 2020
What's an RPS you ask? State legislatures pave the way for strong solar energy incentives to flourish. How? By stipulating standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS).
If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
RPS solar carve out
3% by 2020
What's solar set aside? A solar set aside is a mandate the state sets in its RPS. This guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and as you can see above, some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2020. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2020. Pretty good. However, New Jersey also has a specific solar set aside of 2% by 2021. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is the hottest solar market right now!
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricty.
The caveat here is that if the $0.10 per watt person has a HUGE rebate... they may be better off than the $0.40 per watt person. So because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
State Solar Rebates
What are rebates? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
State Solar Tax Credits
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deducions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
State Solar Property Tax Exemption
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade
State Solar Sales Tax Exemption
When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
Solar Performance Payments
Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
5kw Solar System Purchase Payback Time
State Net Metering
Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Leasing vs. Investing in Home Solar
To lease, or not to lease? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Additionally, if you go the leasing route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar leasing company (after all, that's how they can afford to give you such a no-brainer proposition in the first place). A discussion of the performance payments follows.
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Welcome to the Colorado solar power information page – Details Section
If you want to know if solar makes sense for your home – your utility – your bill size – etc… this is the page for you. We recommend starting with this 2014 Solar Savings Outlook and reading up about what’s going on in the state as a whole, then exploring further into our local resources in Denver.
If you have any questions, our network of solar experts are on call to assist you! Simply sign up for personalized help.
After paving the way forward in 2004 with the nation’s first statewide Renewable Energy Portfolio Standard, Colorado continues to display a refreshing foresight for our future and a healthy respect for its environment with strong overall incentives for residential solar power. While there is always room to improve (more performance-based payments and some state tax credits would be icing on the cake), Colorado’s strong solar rebate programs, tax exemptions, and net metering regulations ensure the Rocky Mountain State will remain high indeed on our list of solar-friendly places.
Colorado Solar Power Performance Payments
Only two Colorado power companies will actually pay you in cash based on energy produced: Black Hills and Xcel Energy. Yes we said Xcel. That means that if you’re one of the millions of people in Denver, Boulder, Littleton, or any other Xcel-served city, in addition to helping fund your installation costs, your utility company will literally pay you cash for every kilowatt-hour of solar energy you produce! Just be sure not to miss out on the opportunity; Xcel will stop offering these incentives after residential-scale solar production goals have been met, and approximately 35% of available program space has already been claimed.
Colorado Solar Power Rebates
A few Colorado localities offer solar incentives. The cities of Aurora and Lakewood, for instance, will refund 100% of the solar installation permit fee. Yes, it is the city charging the permit fee in the first place, but a refund is a refund! Residents of Eagle County receive rebates for the installation cost of solar systems ($1/watt up to $2,000) directly from the county government, and residents of the Roaring Fork Valley are eligible for solar rebates ($.50/watt up to $3,000) from the Community Office for Resource Efficiency, a Colorado non-profit organization.
Colorado Solar Power Tax Credit
Colorado has no state tax credit for solar power. Given all of the other awesome laws flying around this review, and all the areas of renewable energy policy Colorado has led the way in, we’re really not sure what happened to the state tax credits. Did someone forget?
When you install a residential solar system in Colorado you are exempt from 100% of related sales and use taxes, and exempt from paying property taxes resulting from the increase in your home’s value. Now that’s how we like our renewable energy laws: simple, smart, and saving you money.
Those solar power rebates are great, but the real vein of Rockies gold for solar comes from Colorado’s utility companies. Just check out the money you can save on solar system installation:
Utility Company – Rebate Amount – Cap
Black Hills Energy - $750/kw – $4,500
Colorado Springs Utilities - $1,800/kw – $18,000
La Plata Electric Association - $400/kw – $4,000
Poudre Valley REA - $1,500/kw – $4,500
San Miguel Power Association - $1,250/kw – $3,750
Southeast Colorado Power Association - $1,500/kw – $4,500
United Power - $750/kw – $2,250
Xcel Energy - $1,000/kw – $10,000
For every kilowatt of solar power you install, you will receive the amount of money listed next to your utility company, up to the cap.
Colorado homeowners pay 10.54 cents per kilowatt-hour of energy, slightly below the national average. That’s cheap. Cheap enough that you may wonder why we are making all this fuss about solar power paying for itself in your electricity savings. Why is energy currently so cheap? Only because we create most of that energy from nonrenewable, environmentally destructive sources like coal and other fossil fuels. Sooner or … even sooner?! the economic and environmental costs associated with fossil fuels are going to become too much to ignore, and energy prices will go up. When that happens the payback timeframe on your solar investment will decrease dramatically, and you and your solar system are going to look really, really smart. We’re talking Einstein-level brilliant here – or at least some really famous economist or something.
If electricity were simply to increase at a rate of 5.5% for the next 20 years, we’ll be looking at a $0.39 kWh charge for electricity from the utility. Your power bill for 1200kWh of usage will now total an average $259 a month from what used to be $100/month. Don’t think it can happen? Think again. Utility rates in Colorado have been increasing at 9% per year over the past 10 years. It is happening already.
But as we said above, every home and everyone’s energy usage is different. The best way to see if solar is right for you is to connect with one of our installers on the ground. They’ll give you a free quote. Free is good. Costs you nothing but time, and if solar is right for you, well, you’re Golden. As in Colorado.
Net metering is one of the keys to successful solar policy, and Colorado may just have the best net metering laws in the country. In short, net metering makes sure that you get credit, either in energy or in cash, for every bit of energy you produce. Your utility will track how much solar power you produce and how much you use, and the utility will ‘store” any extra power your solar system produces. At night or on cloudy days, the utility credits your surplus power back to you.
In addition, Colorado requires utilities to pay you for the net excess energy that your system produces over the course of a year. So if you’re smart about your energy usage, your solar panel can actually turn a profit! The utility company will literally cut you a check at the end of the year for any extra solar juice you’ve contributed to the grid. Colorado makes taking advantage of those savings even easier, allowing you to opt either for the check or to simply roll your extra credit to any subsequent monthly bills. Have we mentioned how we like our renewable energy laws? You rock, Colorado.
PACE Financing for Colorado Solar Power Homes Systems – On Hold (indefinitely?)
So you want to go solar but don’t want to get a second mortgage to finance it? Well, Colorado has already implemented municipal financing, otherwise known as Property Assessed Clean Energy (PACE) financing. This is where your upfront solar cost is paid for with a special property tax assessment. You slowly pay off the tax assessment over 20 years. If you move in 5 years, not a problem. The payments (and solar savings) get transferred to the new owner. It’s a huge win-win program. Unfortunately, these programs are sold out quickly, but check with a local installer if it’s available in your area.
Colorado was the first state to pass a Renewable Energy Portfolio Standard (“RPS”), and they continue to have one of the best such standards with their laudable goal of 30% renewable energy by 2020. Colorado also mandates that by 2020 at least 3% of retail sales must come from distributed generation (“DG”), i.e., not from giant, environmentally destructive power plants. Even better, at least half of that DG energy must come from local sources.
A strong state RPS is a critical part of the total solar package. By setting a high RPS like 30%, Colorado is not only setting a strong policy standard for other states to follow, they’re also setting high targets for the utility companies to meet. It is, after all, the utilities that sell the electricity to all you Coloradans; a great deal of the burden of meeting the RPS standards falls on them.
What does all this mean for you? It means that you want to make the switch to solar now, while you are being offered all this free money! The utility companies don’t want to just give you cash. They need customers to switch to renewable energy sources to help them meet those state-mandated renewable, distributed generation, and locally produced energy goals. You can be certain that once the utility companies have met their share of those goals, they will stop supplementing your solar installation costs. That’s why Xcel, for instance, is only accepting a limited number of program entrants for it’s solar rebates and performance payments. You know you want all that free money to help you save your wallet (and the environment)!
Example 5kW (5000 Watt DC STC) Solar System Return on Investment in Colorado
So right about now you’re asking yourself “just how much money are we talking about?” We’re glad you asked, because the answer is: boatloads of cash! Check out this breakdown of a 5kw system installed in Denver.
We calculated this Denver-based example using an average price of $5 per watt for solar installation. This is a solid national average, but solar panels may be a bit cheaper or more expensive in your area. That means the bill starts at $25,000 … but then we start subtracting a bunch of big numbers:
- State Solar Rebate: subtract $5,000 (5kw x $1,000/kw)
- Year 1 REC payments: subtract $667 (7410 kwh x .09/kwh)
- 30% Federal Solar Tax Credit: subtract $5,800 (calculated after subtracting state incentives)
- Annual electricity savings: subtract $781 annually, multiplied by an increase of electricity rates by 1.5% every year thereafter.
- Cost for solar panels after year 1: $12,752. You’ve already cut the price in half!
- Time to payback: At the current rate of annual electricity savings, you can expect your new solar system to pay for itself in approximately ten years. After that your solar system will start turning a profit, making you money while you save the planet.
- New electricity bill: While you wait for those profits to start rolling in, you are already saving $65 a month on your electricity bill at current rates.
- Greenhouse Gas saved: Did we mention you’re saving all this money while also saving the planet? It’s true. The 7410 kwh of electricity you produce will save 5.1 metric tons of carbon emission. That’s the same as not buying 572 gallons of gasoline or personally planting 131 trees.
As always, this quote is general and could be less…or more. Solar is not a one size fits all sort of deal. Your cost will depend on a lot of factors, including your utility, roof type, energy usage, and lots of other things. In fact, check out these 9 ways it could be more expensive.
Best way to find out exactly is to get one of our free customized quotes. Just saying.
The consensus on Colorado solar power rebates and incentives
Not that many years ago, Colorado led the way in solar policy. While the state’s policies remain strong, they have not grown much over the last few years. We still rate Colorado an A based on solid solar power rebates and a fantastic net metering law, but to be perfectly honest, we are letting you rest on your laurels a bit here. We’d like to see a few more incentives push that time to payback down to 8 years or less, or Colorado’s solar grade is going to start slipping.
If you have more questions, you are welcome to ask them here, but honestly, your home is unique. The best way to determine how much money solar can save you is with one of our free customized quotes. One of our partner installers on the ground will be happy to explain all of this and more. Heck, get 3 quotes and compare. Get 5! They don’t cost anything but a tiny bit of time. We like free. Especially free solar quotes. We’re pretty sure you’ll love free solar quotes too.
Our older archived Colorado Solar Power costs and savings breakdown images for reference: