Is Solar Worth It in Colorado?


Colorado experiences sunny weather all around the year and setting up solar energy systems can help you generate electricity more sustainably.

Colorado is among the most popular states in the US known for its solar installation methods. Here, you will get a detailed overview of – is solar worth it in Colorado along with the breakdown of investment. To promote solar energy, the government is also offering several solar incentives and rebates to the residents. Let us begin and learn what incentives are available for solar in Colorado.

Is Solar Worth It in Colorado?

Yes, it is worthwhile. But why is solar worth it in Colorado? Well, there are certain factors, such as the cost of power, available subsidies, the environment, and sun angle, that will all influence how quickly you break even in comparison to other places. Installing an average-sized solar system can save you around $16,920 over 20 years if you pay cash upfront. If you finance your system with a no-money-down loan, you can start saving in Colorado on day one, though your long-term savings will be lower.

Colorado has long supported the renewable energy industry to safeguard its beautiful terrain for future generations by making solar panels affordable. Here are the top five reasons Coloradoans should consider making the switch:

1. An Abundance of Sunlight

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Colorado residents enjoy an average of 242 to 285 days of sunshine each year, based on the region they live in the state. One of the steps these homeowners in the state are taking to conserve the environment is to replace standard electricity with solar energy. Regardless of whether the roof is partially shaded, it may still receive enough sunlight to power your home.

2. No Sales Tax on System Purchase

When you purchase a solar panel system as a Colorado citizen, the Sales and Use Tax Exemption for Renewable Energy Equipment removes sales tax from the calculation. Colorado’s solar tax incentive specifically states that all sales, storage, and use of components used in solar thermal systems are excluded from the state’s sales and use tax, making solar panels an economical choice. But are you wondering – does Colorado have a solar tax credit, since that makes it more affordable with the benefit of no sale tax on the system? Read on to find out!

3. No Property Taxes on Increased Home Value

If you set up rooftop solar panels as a Colorado citizen, the solar energy system is exempted from Colorado property taxation under the Property Tax Exemption for Residential Renewable Energy Equipment. To qualify for this incentive, a solar power system must be placed on residential property, generate solar energy primarily for home uses, and have a production capacity of less than 100 kilowatts of AC electricity. You will profit from energy savings from solar energy without having to pay property taxes on the system generating electricity, which also applies to a battery system.

Also Read: Do Solar Panels Increase Home Value in Colorado?

4. Rising Energy Costs

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With inflation influencing everything from groceries to electricity, prices are expected to keep rising. Using sunlight for powering your house can help you save money on your electricity costs. In certain circumstances, it may reduce or even eliminate them.

5. Protection Against Power Outages

Installing solar panels and a solar battery to your system is one approach to assist in making sure you have reliable electricity to power your home during harsh weather conditions.

Cross-Reference: Colorado Consumer’s Guide to Buying a Solar System 

What Incentives are Available for Solar in Colorado?

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Since you have just learned that solar is worthwhile in Colorado, now you must be thinking of switching to solar. Therefore, you should know what incentives are available in Colorado.

To make solar cost-effective, the government has outstanding solar incentives to assist you in getting started on your solar path for less money. The incentives available in Colorado are as follows:

  • Inflation Reduction Act: Qualified homeowners who install home solar may be eligible for a 30% tax credit on the cost of the installation.
  • Property Tax Exemption for Residential Renewable Energy Equipment: Property tax exemption in Colorado deducts the increased value of a solar panel installation from the home’s tax value.
  • State Sales and Use Tax Exemption for Renewable Energy Equipment: State sales tax exemption for household solar systems is 2.9%.
  • Local Utility Company Incentives and Solar Rebates: Cash incentives for the purchase of new regular and rooftop solar panels vary depending on utility and system size.
  • Xcel Energy Colorado Solar Rewards Program: Compensation is based on the number of kilowatt-hours (kWh) produced by the system.

Also See: Ontario Solar Panel Program

What are the Solar Rebates in Colorado?

In addition to the significant federal solar tax credit, the state of Colorado offers a variety of tax credits and solar rebates to its residents.

1. Net Metering

Colorado has helpful net metering policies that permit you to link your solar panels to a public utility power grid. If you have excess energy that you don’t require immediately, you can sell it back to the grid for credits that can be applied to your future energy bills.

2. Cash Rebates

Colorado residents who want to set up solar on their land have two rebate options listed below:

  • EnergySmart Colorado: It is a rebate that depending on your region, you could potentially be eligible for a reimbursement ranging from $400 to $2,500.
  • Holy Cross Energy: Its outstanding per-kilowatt (kW) rebate can result in savings of up to $3,000.

Solar rebates are another reason why solar is worth it in Colorado. So, choose renewable energy and go green.

Also Read: Net Billing Vs Net Metering

Does Colorado have a Solar Tax Credit?

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Yes, the federal tax incentive, often known as the federal solar tax credit, provides those homeowners who go solar with a tax reduction. If you qualify, you will receive a federal tax credit equal to 30% of the cost of a solar energy system. Eligible expenses include the cost of Colorado solar panels, installation, and supporting systems such as batteries, wiring, and inverters.

Getting a potentially hefty tax credit on your federal taxes makes Colorado solar panels even more affordable. This is also one of the key reasons why is solar worth it in Colorado. The credit is applied to your federal tax liability to lessen or eliminate your due balance. If you have no liability or credit remaining, the balance will be forwarded to the next tax year.

In 2022, Congress granted an ITC extension until 2034 which is now known as the Residential Clean Energy Credit. In that, you will be eligible for the credit if your system is installed between 2022 and 2032. The credit will be reduced to 26% in 2033 and 22% in 2034.

With all these tax credits and rebates, you must be wondering how much are solar panels in Colorado. Let’s find out!

Also See: Can You Claim Solar Tax Credit Twice?

How Much are Solar Panels in Colorado?

Financing choices will differ substantially depending on the installer and state. The average solar panel cost in Colorado is around $3.42/W based on a 5-kilowatt solar panel system, while the typical solar installation cost in Colorado ranges from $13,000 and $ 19,000, with the average gross price coming in at around $17,100. After deducting the 30% federal investment tax credit (ITC) and additional state and municipal solar incentives, the total cost of solar can be thousands of dollars less. Keep in mind that many factors influence overall cost, including:

  • The number of panels
  • Tools you select
  • Your home’s layout
  • Solar incentives availability

After learning why is solar worth it in Colorado, take a look at the several financing options:

  • Cash payments are popular among Colorado homeowners because they provide the best long-term return for your money.
  • Some solar companies offer financing options such as solar loans and solar lease/Power Purchase Agreements to assist in funding a solar energy system.
  • Solar leases and power purchase agreements (PPAs) are quite similar in that they both allow homeowners to lock in a low monthly rate for electricity and equipment through a third-party finance provider.

The below table will provide you with the approximate price of different size systems with deductions based on incentives and credit offered:

System SizeApproximate CostApproximate Cost after ITC
3 kW$10,260$7,592
4 kW$13,680$10,123
5 kW$17,100$12,654
6 kW$20,520$15,185
7 kW$23,940$17,716
8 kW$27,360$20,246
9 kW$30,780$22,777
10 kW$34,200$25,308

Note: The only way to find out how much your solar panel installation project will cost is to get a solar estimate from one or more solar businesses. The companies will provide estimated costs and expenditures that will cost ahead of time. 

You can also take a look at our blog – Understanding Electric Bill Before and After Solar Panels: Changes and Savings

How Much You can Save and Expect Payback?

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After getting a quote on how much are solar panels in Colorado, are you wondering about saving and the payback period? The amount of money you can save with solar panels is a major concern for individuals who are still dicey about solar panels. It depends on a few things, such as how much electricity you regularly consume, your local utility rates, and the number of solar panels you install. In general, the more solar panels you put in and the more solar electricity you utilize, the more cash you save each month.

For example, a solar system has an average energy cost of $150+, which means that if you install enough solar panels to match your home’s electrical demand; you could save up to $1,800+ each year. Additionally, to recover your initial investment average, houses in Colorado see a return on investment in 10-14 years depending on the consumption of energy and utility rates.

Note: If you want to use solar panels to power your home or company, you ought to consult with a solar specialist. They will tell you about the rules, incentives, installation, and pricing of a solar power system in Colorado to get the best deal. To get the most up-to-date- information on rebate programs and the available incentives, you can also check out the official websites.

Installing a home solar system in Colorado provides clean energy and a consistent return on investment. The solar rebates in Colorado help you get the benefit of energy independence and net metering rebates. Hence, you can easily conclude if solar is worth it in Colorado or not.

Recommended: Solar Incentives and Rebates in Canada

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