How to Save Money on Solar Panels In Colorado

Solar panels

How to Save Money on Solar Panels In Colorado

In 2023, Colorado produced over 1,700MW of solar, providing energy to businesses and residents. With some of the best renewable standards anywhere in the country, it’s no surprise that the push for alternative energy is on the rise. As such, you might want to know how you can save money on solar panels in Colorado.

You don’t have to look far in the Centennial State. From rebates to tax exemptions, homeowners can find incentives in just about any category. For an in-depth list of where to start, keep reading.

Solar Panel Savings in Colorado: Overview

Colorado already has some of the lowest solar costs in the U.S. However, homeowners looking for even more ways to save should know that the Centennial State also provides excellent support for renewable energy. While benefits vary across the country, there are three forms in which they generally come:

A wide variety of opportunities exist in every category for Coloradans. Alongside great federal returns, the Centennial State offers tax exemptions, rebates, and more. Let’s break these down into further detail.

Solar Panels in Colorado: Federal Incentive

If you’re unfamiliar with where to save money on solar panels in Colorado, the first benefit to look into is the federal tax credit. This incentive returns 30% of all solar purchases — equipment, power storage, installation, labor, etc — in the form of a credit off federal taxes for the year they were bought.

Qualifying Coloradans can benefit from this incentive until 2032 when it starts to taper off until its terminating date in 2035. It’s important to note that if homeowners in Colorado want to take advantage of this credit, they’ll have to purchase their solar panel system outright. We’ll cover more on this below.

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Some utility companies offer Colorado residents up to $1,500 in rebates for installing a solar panel system.

Colorado Credits and Rebates

What often comes as a result of a progressive renewable energy agenda is solar rebates on purchased equipment. This type of incentive is widespread in Colorado, with utility companies paying residents up to $1,500 for installing an array. 

While most municipalities in the Centennial State have met their rebate capacities, some cities still have a budget for more. Additionally, with Colorado pushing for better renewable infrastructure in the future, it’s possible to find more rebates in the coming years. 

A benefit that Coloradans can always take advantage of is the state’s net metering laws. These regulations require utility companies to purchase a certain amount of excess solar energy from residents. Coloradans can have a year’s worth of excess energy credited to them, or have it rolled over each month. They’ll even receive free energy in times of low output.

One utility company in particular, Xcel offers a payment program that pays for the amount of solar energy you produce. After signing up for the program, your array will pay $.07/kWh. That comes to about $700 a year with a 6kW system.

All of these benefits directly put money into your pocket, but Colorado takes state incentives one step further. Citizens in Boulder, CO can take advantage of a 50% solar grant if they qualify for the low-income program. Those making $82,000 or less for a family of 4 could purchase a 6kW solar panel system for just over $5,000 after subtracting the federal tax incentive.

Solar Panels in Colorado: Government Regulations

The backbone of Colorado’s monetary benefits is in its Renewable Portfolio Standard (RPS). The Centennial State’s RPS allows us to forecast the direction of its investments in alternative energy sources. In 2021, Colorado stated that it aims to have 28% of its energy come from renewable energy.

However, the state doesn’t stop there; Colorado is one of few states with a solar carve-out. This regulation states that a certain percentage of renewable energy must come from solar. In Colorado, 3% of the RPS is carved out for solar energy.

Alongside the state’s renewable standards, Coloradans can also take advantage of both property and sales tax exemptions. This means that any solar installations made to a household won’t apply to the total property tax each year. Additionally, no purchases will incur a sales tax, although this takes away from the federal credit.

Should Coloradans Lease Solar?

Colorado is one state where leasing still results in a slight net saving. While you’ll still pay a monthly payment to the company that owns the array, the hugely discounted cost of energy means you still pay less per month than you would for traditional energy. This is a fine option for those looking to save money on bills but doesn’t have enough upfront to buy a system outright.

It’s important to note that Coloradans leasing a solar panel system will miss out on some benefits. Because you don’t own the array, you also won’t receive credits or rebates from the utility company. Additionally, you won’t receive a federal return on your taxes. However, you also won’t have to worry about maintenance over the system’s lifetime.

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On average, Colorado homeowners could see a net return of nearly $15,000 over the course of 25 years.

Colorado Solar: Incentive Summary

Federal Tax Incentive30% credit
Colorado Tax Credits / RebatesRebates up to $1,500
Net MeteringAnnual credit, monthly roll-over
Renewable Portfolio Standard28% by 2030, 3% solar carve-out
Property Tax ExemptionYes
Sales Tax ExemptionYes
Performance Payment ProgramMunicipality-based

Solar Panels in Colorado: Further Reading

Saving money on solar panels in Colorado is easy with the wide range of opportunities available. And with strong support on the state level, the benefits will only continue to grow. For more on how to take advantage of solar in the Centennial State, check out the articles below.

Can You Recharge an Electric Vehicle With Solar? – What if you could use your house’s solar panels to charge your car? We’ve got the details here.

Owning an EV in Colorado: Charging, Cost, Incentives, and More – Speaking of electric vehicles, what does it cost to own one in Colorado?

The 10 Largest Solar Panel Companies in the World, and What They Do – You can find incredible deals on solar panels depending on the manufacturer. These are the brands you should get to know.

Frequently Asked Questions

Do you actually save money going solar in Colorado?

While Colorado already has good rates on electricity, you can still save money by switching to solar. Homeowners on average could see a net return of nearly $15,000 over the course of 25 years.

How long does it take for solar panels to pay for themselves in Colorado?

In Colorado, where the average annual electrical bill is $1,183.44, homeowners could expect to pay off a 6kW solar panel system in 12.7 years.

How much do solar panels cost in Colorado?

With massive support from the Centennial State, Coloradans could spend an average of $2.51/W on solar. That translates to about $15,060 for a 6kW system.

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