Welcome to the Colorado solar power information page
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
Coloradans are smart, smart people. In 2004, the state's citizens voted to enact the nation's first Renewable Energy Portfolio Standard, setting a goal of 30% of electric generation from the state's biggest utilities coming from renewable sources by 2020. Then, in 2015, both Colorado and Federal courts rejected a constitutional challenge of that mandate. Good job, Colorado!
On top of that, the wonderful citizens of continue to display a refreshing foresight for our future and a healthy respect for the state's environment. While there is always room to improve (more performance-based payments and some state tax credits would be icing on the cake), Colorado’s tax exemptions, and net metering regulations ensure the Rocky Mountain State will remain high indeed on our list of solar-friendly places.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $3,500/kW! This is paired with the Colorado solar incentives you see below.
Your Solar Strategy in Colorado
Figuring out the best way to go solar in Colorado can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in Colorado
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a home equity line of credit (HELOC), though, your payments over 15 years will be only a little more than your savings, and you'll still come out tens of thousands ahead in the end.
The option with the smallest savings is for a solar lease or PPA, which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. Leases and PPAs are an excellent option if you don't have any equity or cash to put down.
Read on to find out more about each option.
Solar Leases in Colorado
Coloradans have long enjoyed the ability to get solar from a third-party company and pay monthly, and leasing is still a great way to go. The state legislature and public utilities commissions are generally into letting people go solar in a number of ways, so there isn't much reason to worry that utility companies will start trying to impose monthly fees on solar homeowners like they have in other states.
For now, leasing a 5-kW solar system can save you about $16 per month, which might not seem like much, but adds up to big money over the 20-year life of the lease.
Here's how a solar lease works:
Example Lease savings in Colorado
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
The numbers above show the savings with a solar lease for an average home in Colorado. The typical electric bill before solar power is super expensive, but with a solar lease, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's how a solar lease saves you money:
With a lease, you're essentially renting your rooftop to a company who wants to install and maintain solar panels on it. You make a monthly payment to them and get all the power the system produces. The payment plus you new, lower power bill will be lower than you used to pay, netting you instant savings with nothing down out of pocket! How awesome is that?!
A PPA, on the other hand, is just what the name says. Your roof still plays host to the panels, but you pay only for the electricity the system generates, at a cost lower than what you've been paying GiantCo utility company. The money you save is only limited by how much sun your roof gets!
Here's the best part: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in Colorado. If you're ready for a custom quote for a solar lease, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Home Solar Power: Leasing Vs. Purchasing
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).
Solar Loans in Colorado
Don't have $18,000 sitting around to pay for solar? No sweat! As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is still the best option when it comes to percentage return on investment.
That’s because using a loan to pay for solar is like investing in a really sweet IRA. Making your loan payments almost like funding an investment account, because the solar panels on your roof produce income (returns). Once the loan is paid off (fully vested), you're making almost $1,500/year in profits, netting thousands over the 25-year life of your system.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a home-equity line of credit (HELOC) for $17,500, with a fixed rate of 5% or lower and a 15-year repayment period.
- You love making money without much risk
The reason this works so well is that you don’t have to put any money down, but you still get all of the incentives that go along with buying solar. You'll get the 30% federal tax credit in year 1, and the energy bill savings will start right away. Like we mentioned above, your loan payments will be a tiny bit higher than those energy bill savings, so you'll end up spending about $64/month for solar in the first year. That difference will come down each year as electricity prices rise, but your system will keep on producing about the same amount of electricity.
Here’s how the numbers pencil out for a Colorado solar purchase with a HELOC:
- Installing a typical 5-kW solar system should start at about $17,500. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $889, but your loan payments will total $1,661, for a difference of $771, or about $64 per month.
- That's not so bad when you consider your tax savings for the year will be $5,250! You'll come out $4,479 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- The benefits of that early tax break are so great that you'll only begin spending money in year 9. And after the loan is paid off, your profits stack up just like if you bought the system outright. You'll end up with $14,974 in profits over our 25-year example.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 134 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Colorado. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in Colorado
An outright purchase used to be the only way to get solar, and it's still the option that provides the best dollar-for-dollar returns. The reason it's so great is that you own the system from day one and reap all the benefits. The Federal and State tax credit and electricity savings bring your first-year costs way down.
In our example, you put down $17,500 up front, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced over $22,000 in income.
But even though that sounds huge, look into the HELOC option too, because taking a loan to buy an income-generating asset means you'll be making money as you pay for it.
Here’s how the numbers pencil out when you pay up front for a 5-kW rooftop solar system in Colorado:
We calculated these numbers for an average Colorado home, without rebates or performance payments. Read more at those links to see if you qualify for any of the state's incentives, and be sure to sign up for a custom quote from one of our local installer partners in Colorado!
- Installing a typical 5kW solar system should start at about $17,500. Don’t worry – even without rebates, your first-year costs will be considerably less than that.
- Since the Feds calculate their incentive based on actual out of pocket costs, the lack of rebates means a bigger federal solar tax credit. Subtract $5,250 (30% of $17,500) for a new price of $12,250.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be about $889. That reduces your cost after the first year to only $11,361.
- Over the 25-year life of your system, you'll see a total net profit of $22,384, after the system pays for itself.
- And don't forget... your home's value just increased by almost $18,000, too (your expected annual electricity savings over 20 years)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 134 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Colorado. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Important Colorado Solar Policy and Incentive Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Colorado:
30% by 2020
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 its solar performance payments (more about this later). You know you want all that free money to help you save your wallet (and the environment)!
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting 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.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner.
RPS solar carve out
3% by 2020
While it isn’t explicitly a solar carve out, Colorado does require that at least 3% of the electricity sold by the state’s Investor-Owned Utilities come from distributed energy resources. That’s a fancy way of saying that they need lots of homeowners to serve electricity to the grid, and we think the best way is through generation of clean, reliable solar power!
What's a solar set aside? A solar set aside 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 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 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Colorado Electricity Prices
Colorado homeowners pay about 12 cents per kilowatt-hour(kWh) of energy, just about even with the national average. So power these days isn’t prohibitively expensive; in fact it’s cheap enough that you may wonder why we are making all this fuss about solar power paying for itself in your electricity savings.
But think about why energy is currently so cheap. Ding ding ding! It comes from fossil fuels, which have been abundant and free-flowing for decades. Thing is, no matter whether you love burning coal or you love hugging trees, we can all look at the trend for energy prices and see that they will continue to go up, year after year, for the foreseeable future.
If electricity were simply to increase at a rate of 3.5% for the next 20 years, we’ll be looking at a doubling of electricity charges from the utility. Your power bill for 1200 kWh of usage will now total an average $236 a month for what used to cost $100/month.
Don’t think it can happen? Think again. A 3.5% increase is a conservative estimate for the mountain region. There was a 4.5% increase from 2013 to 2014 alone.
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.
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 electricity.
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. 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.
Colorado Solar Power Rebates
Varies by utility
The real vein of Rockies gold for solar comes from Colorado’s utility companies. They have to meet the state’s RPS guidelines, so they’re willing to help you put solar on your roof, just for joining the world of electricity generation. Truth be told, though, the big, fat rebates of years past are all but gone in the Rocky Mountain State. The good news is prices for solar have dropped by about the same amount of the erstwhile rebate money! The rebates worked!
Here’s a guide to some of the utility-based programs out there right now:
|Utility Company||Rebate amount||Notes|
|Colorado Springs Utilities||$1/watt||Subject to equipment warranty requirements. Funding exhausted until 2016.|
|Eagle County||$500||Must be installed by a NABCEP-certified installer|
|Holy Cross Energy||$200-$750/kW, based on size||Max of $10,000, non-taxable entities can get additional incentives|
|La Plata Electric Association||$300||Incentive switches to performance payments for systems larger than 10kW|
|Lake County||$400||Must be installed by a NABCEP-certified installer|
|Poudre Valley REA||$1/watt||Maximum incentive of $3,000 per customer|
|Roaring Fork Valley||$1/watt||Up to 3kW system ($3,000)|
|San Miguel Power Association||$.75/watt||Maximum incentive of $2,250|
|United Power||$0.10/watt||For systems installed before 12/31/15. Maximum of $1,000.|
A few Colorado towns offer solar incentives. For example, the cities of Aurora and Lakewood 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!
How do solar rebates work? 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.
Colorado Solar Power Tax Credits
This is where Colorado is missing the mark on solar policy. A solar power tax credit has proven to be a great help to citizens of forward-looking states. But don’t get too down; the US government still offers a sweet, sweet 30% federal tax credit.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' 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.
Property Tax Exemption
A solar installation adds value to the home it’s installed on. Like, we’re talking thousands of dollars, here. The good news in Colorado is that homeowners who go solar will not pay a single, solitary, Denver-minted penny in taxes on that value. Thanks, Colorado!
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.
Sales Tax Exemption
When you install a residential solar system in Colorado you are exempt from 100% of related sales and use taxes. Now that’s how we like our renewable energy laws: simple, smart, and saving you money.
What's the deal with solar power sales tax exemptions? 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 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 most of the available program space has already been claimed. If you can get in to the program in 2015, you'll get a payment of $.02/kWh for 20 years, which adds up to about $3,000 total. That's awesome!
For the Xcel program, as of 2015, you'll receive $.02 per kWh your system produces. In Colorado, a 5kW system will churn out roughly 7000kWh annually, so that's about an extra $140 in your pocket! As of this writing, Black Hills Energy is offering payments of $0.05/kWh for installations less that 10 kW in size, but only for the first 5 kW. That’s still a sweet deal, worth nearly $400 for you.
Explanation of 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 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
Time it Takes for 5kW of Solar Power to Pay for Itself
Colorado Net Metering
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.
What is 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.
Colorado Interconnection Rules
Interconnection refers to the rules and restrictions that govern how solar power systems are connected to the utility company’s lines. Colorado does a good job here, following federal recommendations, but they could improve by eliminating solar farm size restrictions and requirements to get additional insurance for solar installations.
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.
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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 for everyone—not just for people who happen to live in areas with good rebates.
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!