Colorado Solar

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Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and systems in Colorado.

Colorado Solar

Colorado is one of the sunniest places in the United States and boasts over 74,000 solar system installations. Much of Colorado is mountainous, but it also has plains and deserts. It is home to the city of Denver, the most populous city in the Mountain States. Colorado state government policies favor solar tax incentives. Despite relatively low energy-prices, the tax incentives and encouraging utility policies make Colorado a favorable place for businesses and residents to install solar panels and battery systems.

Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in Colorado.

Colorado Solar Incentives

Colorado provides multiple solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in Colorado and also apply them to the available solar panel offerings.

The EnergySmart Colorado program provides many local solar incentives:

  • Xcel Energy pays cash monthly to solar customers through its Solar*Rewards program.
  • Black Hills Energy offers a limited number of production-based incentive (PBI) opportunities every quarter. If selected, you are paid by check based on the size of your system and amount of excess energy you produce.
  • Colorado Springs Utilities offers a $0.10 per watt Renewable Energy Rebate.
  • The City of Aspen offers a $0.75 per watt rebate of up to $2,250 plus additional incentives for batteries and electric vehicle chargers.
  • Holy Cross Energy offers a tiered incentive structure. It’s based on the size of your system and increases if you have a battery.

Colorado Rebates and Tax Breaks

Here are more details about the incentives available in Colorado:

  • The Sales and Use Tax Exemption is a tax break where you don’t pay any sales tax on solar panels, systems or related equipment in Colorado.
  • The Property Tax Exemption for Residential Renewable Energy Equipment provides a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).
  • There are plenty of local incentives depending on where you live and which electricity provider you have. EnergySmart Colorado gives rebates from $400 to $3,000 for home solar installations in Pitkin, Eagle and Summit counties, or in the Eagle Valley. San Miguel Power, Holy Cross Energy, Aspen Electric and Xcel Energy also have customer rebates or per-watt reimbursement programs. There are also some incentives for battery systems, solar hot-water systems and electric vehicle chargers among other energy saving measures.

Other Solar Energy Incentives

The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 26% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).

If you purchased a $20,000 system, your savings from the federal tax credit would look like this:

$20,000 X 0.26 = $5,200 savings

So if you spent $20,000 on that system, your cost would go down to $14,800. Depending on where in Colorado you live, additional rebates could save you even more.

Utility Policies

Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. Colorado gets a high score for utility policies.

Net Metering and Interconnection Policy

One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.

Colorado’s Net Metering program is highly favorable. You are paid the full retail amount for your excess energy in the form of a bill credit. Credits can be carried over into the next month, and at the end of the year, you receive a check for any excess energy you have produced.

Solar Setup Fees

You must have a bi-directional meter (necessary for Net Metering), which is installed at no cost.

Electricity Prices

Electricity prices in Colorado are on the low end. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.

According to the US Energy Information Administration, the average total cost of electricity in Colorado is $0.124 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.

Rate Design

Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees.

Colorado is above average when it comes to the quality of its electricity bill rate design. It has many tiered rate programs and low fixed fees (around $5–$10 per month). Its mandatory time-of-use electricity rate plan, where your rate is lower during the day, also benefits solar customers. This is especially true if your system has a battery.

You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the savings obtained from a net metering program.

PACE Programs

PACE stands for Property Assessed Clean Energy and is available in Colorado through the C-PACE financing program financing program. You can finance your solar system, but the low-interest, long-term loan is not attached to you; it’s attached to your home. It is paid back as a Local Improvement Charge (LIC) on your property tax bill. There is a $600 closing cost, and to qualify, your project must undergo a review to ensure it promotes utility cost savings.

Other Energy Financing

Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too. Colorado has a special

RENU loan with low interest rates and no cost reamortization that allows you to finance up to 100% of your solar project ($50,000 limit).

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