Colorado Solar Incentives, Tax Credits, Rebates and Solar Panel Cost Guide

According to EnergySage, the average solar panel cost in Colorado is $3.13 per watt. So if you install a solar panel system that’s five kilowatts (which is an average size), a typical solar installation in Colorado will range from $13,302 to $17,998, with an average Colorado solar panel cost of $15,650.

Average Colorado Solar Panel Costs by System Size (Before and After Federal Credit)

System Size	System Cost	System Cost (after ITC)
4 kW	$12,520	$9,265
5 kW	$15,650	$11,581
8 kW	$25,040	$18,530
*Data courtesy of EnergySage

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Many homeowners in Colorado are interested in switching to solar energy due to the sunny weather. To ensure the transition is more affordable, several financial incentives are available to help reduce initial costs and increase long-term savings associated with solar installations. Colorado offers federal tax credits, state incentives and utility rebates, making it feasible for more homeowners to adopt solar energy.

INCENTIVE	DESCRIPTION	TYPE	OCCURRENCE
Federal solar tax credit	Federal income tax credit for 30%	Nonrefundable tax credit	One-time
Net metering	Payment from utility company for excess energy generated	Payment	Ongoing
Cash Rebates	Offsets the upfront costs of installing a solar panel system	Monetary Reward	One-time
Weatherization Assistance Program (WAP)	Provides various weatherization services to improve the energy efficiency of low-income households	Service	One-time
Property tax exclusion	No increased property taxes after installing solar panels	Tax exclusion	Annually
Local Colorado solar incentives	Varies by power company and location	Varies	Varies

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The Federal Solar Investment Tax Credit is a tax incentive in the United States designed to encourage the adoption of solar energy by reducing tax liability. With this credit, individuals can claim 30% of the total cost of solar equipment, including labor, materials and installation expenses.

It’s important to note that specific requirements must be met to qualify for this credit. For instance, the ITC applies only to individuals who purchase their photovoltaic (PV) system outright, excluding those who choose to lease or finance it. You’ll also want to consider your income level, as the financial benefits of the tax credit may vary. However, higher-income individuals may receive little or no benefits from the tax credit.

In addition to the generous federal solar tax credit, the state of Colorado also provides residents with several Colorado solar rebates and tax credits.

Net Metering

Like many states, Colorado does have a generous net metering policy. Net metering allows you to connect your solar panels to a public-utility power grid. If you produce any excess energy that you don’t need right away, you can sell that energy back to the grid for credits that can be used toward your future energy bills.

Cash Rebates

There are a few cash rebates available to Colorado residents who want to install solar on their property. We’ve listed two popular options below:

1. EnergySmart Colorado: Depending on your location, you could be eligible for a rebate of anywhere from $400 to $2,500.
2. Holy Cross Energy: this fantastic per-kilowatt (kW) rebate can equate to savings of as much as $3,000.

The Weatherization Assistance Program (WAP) is a state-level initiative to improve the energy efficiency of low-income households. The program provides eligible residents with various weatherization services like roof repairs and insulation, plus energy efficiency upgrades like solar systems to reduce energy consumption, lower utility bills and increase overall home comfort. Not to mention, Colorado was the first U.S. state to be integrated into the Weatherization Assistance Program (WAP).

Is there a Colorado solar property tax exemption? Of course. The state of Colorado is committed to clean energy, and that means the state is more than happy to pass tax breaks to residents willing to switch to solar. The Sales and Use Tax Exemption for Renewable Energy Equipment prevents you from having to pay sales tax when you purchase your solar system.

And the Property Tax Exemption for Residential Renewable Energy Equipment means you won’t have to pay property tax on the increased value of your house as a result of the installation of your solar system.

From small systems that can power one or two major appliances, to large systems that can power an entire large house, there are several different types of solar systems. To help you decide which type to install on your home in Colorado, we’ll outline the four main types below.

Each system is powered by photovoltaic components. The main difference between the types is the size and the potential energy collected. Let’s review the different types below.

Portable Solar System

Suitable only for use on campers, RVs and trailers, a portable solar power system is the smallest type of system. These units typically only employ the use of one solar panel, and are only strong enough to power one or maybe two appliances, like a laptop or a TV.

Grid-Tied Solar Energy System

If you’re hoping to transition to solar energy on a small scale, and still get most of your electricity from your power company, you might benefit from a grid-tied solar energy system. This is the most economical solar system outside of simply having a portable unit, and you’ll still qualify for  net metering, as well.

Grid-Tied Solar System With Battery Backup

With a system like this, you’ll likely use very little electricity from your power company. That’s because you’ll be collecting your own solar power, and you’ll have a solar-powered backup battery as well. This type of system should be able to run an average-sized home, as long as the system remains installed and in good working condition. The backup battery is great for emergency use or if your main system requires maintenance.

Off-Grid Solar Energy Systems

An off-grid solar power system allows you to have electricity without drawing from an electric company at all. This type of system will be the most expensive but also the most comprehensive type of solar system in Colorado.

We’ve all heard of the positive environmental impacts of solar energy. But are there any benefits that directly affect your household? It turns out there are. Keep reading for some of the pros of installing solar panels on your home.

1. You Can Lower Your Electricity Bill

Unless you have an alternate power source, there’s a good chance you consume electricity from the grid all year long. Most homes in the US use electricity for keeping cool in the summer and warm in the winter. Choosing solar power for some or all of your electricity needs can keep your utility bills low. Even if you don’t generate enough energy to completely offset your bill, even a reduction in energy costs can be helpful.

And according to Your Energy, an extension of Colorado State University, a five kilowatt system will generate an average of 8,000 kilowatt hours per year. At an average cost of $.11 per KwH, Colorado households can expect an average annual savings of $880.

2. You Can Avoid Increasing Electricity Costs

When considering the solar panel pricing and incentives in Colorado, don’t forget to factor in the fast-rising cost of electricity. Especially if you’re looking to the future or are living on a fixed income, you may not want to subject your household budget to these rising energy costs.

3. Solar Panels Require Little Maintenance

Once your system is installed, you won’t have to worry about much upkeep. Solar panels are sturdy, require only occasional cleaning and can endure harsh weather conditions. They’re not easily broken and have no moving parts. Projected to last as long as 30 years, solar panels require very little maintenance.

According to SunPower, the state of Colorado is one of the best states for solar energy. The site indicates that 86% of Colorado’s buildings are solar-viable with the capacity to produce 24.7 million megawatt hours each year.

From reducing your energy costs to receiving solar incentives to helping the environment, adding solar to your home comes equipped with plenty of benefits. Plus, Colorado is one of the best states in the country for solar panel installations, but here’s why:

• Energy efficiency: Colorado has varying electricity rates across the state. If you typically high electricity rates, solar can provide greater financial savings over time.
• Solar incentives: With all the benefits of solar, it’s no surprise that Colorado has created a number of programs to help you go solar. The Federal Solar Investment Tax Credit (ITC), state-level incentives and local utility programs will help you save money on your new system.
• Environmental benefits: Solar energy is clean, renewable resource that assists in reducing greenhouse gas emissions. Installing solar panels aligns with Colorado’s commitment to sustainable energy practices and can have positive environmental implications.

There are many solar panel companies in the state of Colorado. In general, you could follow the tips listed below in order to find the right provider for your needs.

• Check reviews
• Ask on local sites like Facebook or Yelp
• Decide whether you want local Colorado solar company or a national provider
• Check for certifications and licenses
• Review financing options