Welcome to the Ultimate Guide to Solar Panels in Colorado
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Colorado home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2020 **
It's 2020, and the state of home solar in Colorado is strong! 100% of electricity now needs to come from carbon free renewable sources by 2050. Residents of the most populous areas continue to benefit from Xcel’s solar rewards program which pays extra for solar credits over 20 years. Way to go, lawmakers!
We've got a brand new page all about the specifics of going solar in Denver and the surrounding areas. If you live in the area and are served by either Xcel Energy or United Power, check it out. Speaking of Xcel, they've got a nice program called Solar*Rewards, which earns you a little extra money for every kilowatt-hour of electricity your panels generate.
Rebates are still available for residents of Boulder and Colorado Springs, too. All in all, Colorado is a great place to go solar, and we know expert local installers. If you're ready to see how much you can save with solar on your roof, click over and get quotes from our partners.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Colorado, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Colorado. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Colorado.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
Generate an accurate online solar estimate for your home
|Your Colorado Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Colorado|
|Solar Loans in Colorado|
|Solar PPAs in Colorado|
|Solar Purchase Payback Time in Colorado|
|Colorado Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
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:
How to pay for solar panels 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 solar loan or 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.
How much can solar panels on roof save you?
Option 1: Paying cash for solar
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 nearly $18,000 in income.
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 $17,993, after the system pays for itself.
- And don't forget... your home's value just increased by more than $20,000, 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 123 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.
Option 2: Using a loan to pay for solar
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 $1,200/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 qualify for a solar loan or home-equity line of credit (HELOC) for $17,500, with a fixed rate of 4.5% 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 financed with a loan:
- 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 $1,442, for a difference of $553, or about $46 per month.
- That's not so bad when you consider your tax savings for the year will be $5,250! You'll come out $4,697 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 $12,607 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. 123 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.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
Coloradans have long enjoyed the ability to get solar from a third-party company and pay monthly, and getting solar with a lease or Power-Purchase Agreement (PPA) 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, signing a PPA for a 5-kW solar system can save you about $11 per month, which might not seem like much, but adds up to big money over the 20-year PPA Contract.
Here's how a solar PPA works:
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 PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Calculate solar panel cost and savings for your specific home
Colorado Solar Policy 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 Georgia—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:
Colorado's Renewable Portfolio Standard
100% by 2050
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 100% renewable energy by 2050.
While 2050 is still 30 years away, we’re excited at the prospects of Coloradans being able to enjoy a 100% renewable energy future. More states should do the same by establishing a 100% standard at some point in the future. The Colorado RPS recently survived a constitutional challenge by some big money industry, kudos on fighting the good fight go to the lawmakers who stood by this ambitious target.
Colorado's Solar carve-out and SRECs
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!
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.
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.
Colorado Interconnection Rules
Statewide with caveats
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.
Colorado Solar Incentives
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 26% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Colorado measures up:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
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||$.25/watt||Subject to equipment warranty requirements.|
|City of Boulder||$500||Must be installed by a NABCEP-certified installer|
|Eagle County||$500||Must be installed by a NABCEP-certified installer|
|Holy Cross Energy||$400-$750/kW, based on size||Initial rebate of $750/kW for the first 6 kW of solar, $500/kW for the second 6kW, and $200 for the final 13kW, up to 25kW max. Max of $10,100.|
|La Plata Electric Association||$16/kW (up-front payment of REC purchases)||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 $3,000 per customer|
|Roaring Fork Valley||$.75/watt||Up to $2,250|
|San Miguel Power Association||$.50/watt||Maximum incentive of $1,500|
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!
Colorado Solar 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 26% federal tax credit.
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!
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.
Low-income Solar Programs
Colorado has (technically) a low-income solar program, funded in part through the federal Weatherization Assistance Program (WAP), and in part by what is sadly an empty account previously funded by Xcel Energy. It's espeically sad because, while the Xcel funding was in place, the program was quite successful, helping 300 Colorado families install solar on their homes for free.
Read more about what Colorado did to offer affordable solar to its citizens. And if you live here, go out there and advocate for more sensible solar programs to increase access for the Coloradans who could stand to benefit most.
Colorado home solar is absolutely great! An average-sized system here pays its cost back in just 9 years, meaning you can count on up to 16 years of free electricity while your panels remain under their 25-year warranties. You might have trouble finding an installer in rural areas, but anyone east of the Rockies should have an easy time getting solar on their roof and saving money.