How much does solar energy really cost?
The typical residential solar system will cost between $15,000-$25,000 once solar rebates and incentives are taken into account. However, this is a small price to pay given that you will probably spend over $72,000 on electricity over the life of your solar system. With solar energy’s popularity rising, some companies have even started offering solar lease options, where the installation requires no out-of-pocket expenses.
The true cost of your solar system depends on the applicable Colorado solar state rebates and your utility’s incentives, as well as the type of solar installation. Qualified installers will be familiar with your local incentives and the permitting process- ensuring that you receive optimal returns from your investment.
What about government tax incentives and rebates?
A fantastic thing about installing solar power in the United States is that there are many state and federal tax incentives and rebate programs that make solar power for your home affordable. The certified solar installer you choose will be up to date on all applicable incentives and rebates. Here is a brief rundown on the basics:
- Municipal and Utility Rebates: Check out the Database of State Incentives for Renewables & Efficiency to discover your municipality’s and utility’s rebates.
- Individual State Rebates: States often offer flat amount rebates or a progressive system of rebates based on the size of your solar system. Detailed, comprehensive information on your state’s rebates can also be found at the government’s Database of State Incentives for Renewables & Efficiency
- Property Tax Exemptions: States often also exclude the value of a solar energy system from your annual property taxes. In example, if your new solar system adds $25,000 to your home value, that $25,000 will not be counted toward your assessed home value when paying property taxes.
- Federal Tax Credit: The Investment Tax Credit (ITC) allows individuals to deduct 26% of the cost of a solar energy system from personal federal income taxes;
What are the current Colorado solar incentives and how do they work?
Colorado offers some of the most attractive incentives available in the US. In addition to the 30% federal tax credit, the state government and local utilities offer a variety of programs that can make a solar system more affordable and bring down the cost of solar:
- The Colorado Residential Renewable Energy Rebate Program, offered through the Governor’s Energy Office, offers an incentive of up to $1.50 per watt (for example, $6,000 for a 4 kilowatt system).
- The state’s largest utility, XCEL, offers an incentive of up to $1.75 per watt (for example, $8,000 for a 4 kilowatt system) payable upfront plus a $0.04 per kWh REC (discussed below) paid monthly for systems up to 10 kilowatts…while the second largest state utility, Black Hills Energy, offers an incentive of up to $2.00 per watt (for example, $8,000 for a 4 kilowatt system) payable upfront plus a one time $0.50 per watt REC for systems up to 10 kilowatts in size. To see if you local Colorado utility offers a rebate program, please click here.
- For larger scale projects, such as commercial projects, XCEL offers a monthly incentive equal to $0.15 per kWh for projects between 10.1 and 500 kilowatts in size, while Black Hills Energy offers a rebate of $2.00 per watt plus an REC payment of $50 per MWh (megawatt) produced over the course of the year.
- Colorado also offer Renewable Energy Credits, or RECs, which are essentially environmental credits for producing green energy on your home and doing something good for the environment. RECs are calculated based on the value your solar panels will produce based on a 20-year utility life. For example, XCEL offers an REC equal to $0.04 per kWh for systems up to 10 kWh, payable monthly (to help put this in context, when you use a 1,000 watt appliance like an AC unit, for an hour, that is equal to 1 kWh).
- PACE financing may be available in some areas. With this special type of financing, homeowners are able to pay for the cost of a solar system with a special property assessment that they can off over many years. Check with a local solar installer to see if these programs are indeed available in your area, as many have been suspended due to recent Federal Housing Finance Agency (FHFA) policy changes.
Please note that all of these rebates programs are not permanent, rather, they are dependent on available funds and are subject to change. So if you are a homeowner or commercial property owner and you are interested in solar in Colorado, please act sooner rather than later to take advantage these rebates!
Does Colorado have “net metering”?
Colorado is a net metered state! Net metering is when homeowners or business owners with solar systems can “bank” the extra energy that their system produces, but they don’t use. The additional energy is stored as credit and can be used to pay for any electricity you may pull from the grid when your solar panels are not producing power. For customers of investor owned utilities, the solar system is limited to 120% of average annual consumption to be eligible for net metering. For co-op or municipal utility customers, residential systems are limited to 10 kW and commercial systems are limited to 25 kW. Due to Senate Bill 51 of April 2009, customers may now have their net excess generation roll over continuously rather than be paid the balance (at average cost) annually. With net metering, CO solar energy just got way more affordable.
If I can’t afford the up-front installation expenses right now, are there any financing options that can help me?
Yes, there are! Our solar partners offer a wide variety of fantastic solar financingoptions that will help offset the up-front installation expenses. In some cases, your monthly financing payment will even be less than your energy savings; it’s almost like being paid to install solar! Because low interest rates are available, a home solar energy system can be a great investment to your property value. Your certified solar installer will have all the information on available solar financing options. However, make sure you ask about the following:
- Home Equity Loans: When you borrow against your home’s equity.
- Solar Lease: When you lease the solar panels for a fee over a set length of time.
- Power Purchase Agreement: Similar to a lease agreement, where the solar provider/installer installs the system on your home/office at their expense, but here, the solar provider sells electricity to you at a fixed contractual price over a set length of time.
**Interested in a $0 electrical bill? Get a free Colorado solar assessment from qualified installers in your area!**