Colorado is known for its ski resorts, but it’s also one of the sunniest states in the country. That’s good news for people wanting to turn it into electricity to power their homes.
Even better news is the state makes it easier for homeowners to go solar by offering incentives that boost their savings. Here’s what you need to know if you’re considering home solar panels in Colorado.
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Does Solar Make Sense in Colorado?
Colorado is a fairly strong state when it comes to cumulative solar installations. The Solar Energy Industries Association ranks it 12th among states. But, incentives and electricity prices allow many homeowners to save money when they switch to solar, which means solar could make sense for you.
Price of electricity
First and foremost, solar panels save you money because they let you avoid buying electricity from your utility. Colorado’s average electricity rate in 2023 was 14.3 cents per kilowatt-hour, slightly below the national average of 16 cents/kWh, according to the US Energy Information Administration.
Price of solar
The cost of solar panels in Colorado will vary by location and home. The complexity of the roof, the size of the system, whether a battery is included, and the local cost of labor and permitting all can affect the cost. The best way to determine the cost of solar panels at your home is to reach out to a reputable solar company for a quote.
According to the Solar Energy Industries Association, the national average cost is $3.33 per watt before incentives, a decrease of 4%.
Available sunlight
Colorado has some of the sunniest skies in the country. That’s good for solar panels.
The state gets a daily average of 4.5 to 5.5 peak sun hours throughout the year, according to the National Renewable Energy Laboratory.
The statewide averages only matter to you as far as they match what your home gets. Shading by trees or buildings could make your home a poor fit for solar. A reputable solar company will evaluate your home’s suitability for solar panels, either in person or remotely.
Outages
Solar panels attached to the grid are designed to shut down during a grid outage. If you have a battery installed with your solar panels, it can keep at least some of your lights on through an outage. How much of your home you can power depends on the size of your battery bank, how you manage your power consumption, and the weather: Your solar panels can recharge your battery when the sun is out.
Colorado utility customers had an average of 99 minutes of outages in 2023. That’s one of the lower averages among the states, but if outages are a major inconvenience, a battery may be a good investment.
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Solar Incentives in Colorado
Solar prices have fallen dramatically over the last decade, but incentives that bring the price down and improve your savings are still a valuable part of most people’s decision to go solar.
Federal tax credit
The federal solar tax credit, more properly known as the Residential Clean Energy Credit, allows owners of qualifying solar systems to claim 30% of the cost of installing them as a credit against their taxes owed in that year.
You need to owe taxes to claim the credit, but if your tax liability is too small, you can roll excess credit to future years. Be sure to consult a tax professional about your situation to ensure you’re eligible to claim the credit.
Net metering
When you install solar panels, you won’t use every bit of electricity they produce. Some will flow back to the grid. Some utilities compensate solar panel owners for that electricity via net metering.
Colorado’s major utilities offer 1-to-1 net metering, under which every kilowatt-hour you send to the grid earns you a credit for the retail rate of one kilowatt-hour. In other words, sending a kilowatt-hour of electricity to the grid is just as good as avoiding buying one. Excess credits typically carry forward to the next month, though you may have an opportunity (or requirement) once a year to cash them out.
Property tax exemption
Solar panels often increase the value of the homes where they’re installed. In Colorado you won’t pay extra property taxes on your solar panels thanks to the state’s property tax exemption.
Sales tax exemption
Colorado also exempts solar equipment from sales tax, a potential savings of hundreds of dollars.
Solar Payback Period in Colorado
Your solar payback period is the time it takes for your savings from going solar to match the amount you paid for it, including installation, maintenance, and repair costs. Payback periods will vary by project, but can be pretty easy to estimate roughly.
( Cost of going solar - Upfront incentives ) / Annual savings = Solar payback period in years
Your payback period could change from what’s estimated when your solar panels are installed. Unexpected maintenance could increase your payback period while higher electricity prices could shorten it. In the last ten years, Colorado’s average electricity rate increased from 11.93 cents per kilowatt-hour to 14.3 cents, an increase of nearly 25%.
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Colorado Utilities and Rooftop Solar Panels
Rooftop solar panels can help you avoid buying some electricity from your utility, but you won’t completely cut ties with them unless you go fully off grid, something very few people do. Your utility’s policies and electric rates will play a role in your solar savings and experience going solar.
| Utility | Avg. rate (cents/kWh) | Fixed monthly fees | Net metering structure | Max system size (DC) | Max consumption offset |
|---|---|---|---|---|---|
| Xcel Energy | 13.00 | $6.35 | 1-to-1 net metering | 25 kw | 200% |
| United Power | 10.4 | $19 (+$2.50 per kw demand) | 1-to-1 net metering | 25 kw | 120% |
| Black Hills Energy | 17.6 | $8.95 | 1-to-1 net metering | 36.25 kw | 200% |
| Colorado Springs Utility | 11.2 | $0.60 (per day) | 1-to-1 net metering | 21.75 kw | 120% |
| CORE Electric Cooperative | 11.80 | $17.25 (+$3.00 per kw demand) | 1-to-1 net metering | 14.5 kw | 200% |
| Grand Valley Power Cooperative | 12.50 | $31.50 | 1-to-1 net metering | 10 kw | No max |
| Delta-Montrose Electric Association | 11.00 | $29.50 | 1-to-1 net metering | No max | No max |
Many of the above numbers are averages and subject to change. For example, your electric rate may vary throughout the year or day if you have a time-of-use plan.
Gas utilities and home electrification
If you use gas to heat your home or cook your food, you pay for two sources of power. Home electrification — switching all of your gas use to electricity — can be a money saver, especially if your electricity rate is low. Combining electrification with home solar panels can help you take a bigger bite out of your energy bills in all. You can make electricity at home, but not gas to run a furnace.
Leasing Solar Panels in Colorado
If you’re interested in going solar but nervous about the cost of panels or your unfamiliarity with them, a solar lease may be right for you. Under a solar lease (or its close cousin, the power purchase agreement), a company owns the solar panels on your roof, and you get the benefits for a monthly fee. When the fee is lower than the amount you save on your utility bills, you save money overall.
When you go solar with the LightReach Energy Plan directly from Palmetto, you get a 90% production guarantee, maintenance and service for the lifetime of the agreement, and an option to buy the system starting after the fifth year, all on a system designed to save you money.
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Solar Panel Maintenance in Colorado
Solar panels can be low-maintenance equipment, but when issues crop up over your solar panels’ lifespan, you don’t have to deal with them on your own. Solar equipment is typically under warranty from the manufacturer. Solar panels (25 years), inverters (10 or 25 years depending on the type), and batteries (10 years) are typically covered for multiyear spans. Solar installers often offer warranties on their work, too.
Some companies offer protection plans, like Palmetto Protect, which offers proactive monitoring and issue detection, access to a vetted network of service providers, and a production guarantee depending on the level of plan you choose.
Snow
Parts of Colorado raise the question: Is it too snowy for solar panels? The good news is solar panels deal with snow fairly well. Because they’re typically installed at an angle, snow slides off (and cleans the panels in the process). Solar panels also generate a bit of heat when they operate, melting the snow faster than your roof would.
Heavy snows may interrupt your panels’ production for longer. There are some products available for removing snow, but it’s best to follow the solar panel manufacturer’s recommendations for dealing with it.
Finding the Best Solar Companies in Colorado
When you decide to go solar, the most important decision you’ll make is which company you’ll work with. But how do you find the best solar company in Colorado? It’s the one that works with you the best.
Here are some tips for finding the best company for you.
- Ask friends, family, and neighbors who have gone solar. Their local experience is particularly useful.
- Choose a company that gives you the time you need to make a decision and clear answers to your questions.
- Read reviews to get a broad understanding of the company
- Consider warranties, after-installation plans, and customer service ratings
Palmetto Reviews
“This process couldn’t have been smoother! Palmetto took their time and explained everything and always answered my questions. I would recommend this company to anyone considering solar!” Jen W. 10/31/2024 Google Review
“Palmetto did an outstanding job guiding us through the entire process of installing solar panels for our home. From start to finish they ensured we were updated step by step. If we had questions their customer service was always available by phone, chat, or email. We could not be happier with our solar panel installation and highly recommend Palmetto to anyone looking to go solar.” Jim R. 11/16/2024 Google Review
“Palmetto was recommended to me by a friend/broker in the industry. The whole experience was transparent. All the local subcontractors were reliable and communicated effectively. I have had my system for 18 months and loving it more and more every month, especially on sunny days!” Gary G. 11/20/2024 Google Review
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Frequently Asked Questions
Are solar panels worth it in Colorado?
Solar panels can be worth it in Colorado. Despite lower than average electricity prices, widespread 1-to-1 net metering policies mean you could save when you go solar. To find out how solar panels might work for you, estimate your savings with Palmetto now.
Is Colorado too snowy for solar panels?
Snow can interrupt solar panel production temporarily, but typically isn’t a huge problem. Because solar panels are slippery and tilted, snow will melt and slide off before it does on the surrounding roof.
Does Colorado have net metering?
Most Colorado utilities offer 1-to-1 net metering.
How does the solar tax credit work in Colorado?
Colorado doesn’t have a state tax credit, but Coloradans can claim the federal tax credit if they have a tax liability and have purchased a qualifying solar panel system.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
