Hey there! If you call Colorado home and are thinking about installing solar panels, you’ve come to the right place. Adding solar PV (photovoltaic) systems to households is wildly popular across the Centennial State thanks to excellent incentives at both state and federal levels.
In this guide, I’ll give you a comprehensive overview of all the ways you can maximize savings when going solar as a Colorado homeowner. With the right combination of rebates, tax credits, and financing programs, you could end up covering more than 50% of your total system costs!
Solar Power is Booming in Colorado
Before jumping into the different incentives available, it’s helpful to understand why Colorado has become such a solar-friendly state recently.
In 2021 alone, over 1,700 megawatts (MW) of solar energy was added – that‘s enough to power nearly 250,000 average homes! What‘s driving this massive growth?
For starters, Colorado has some of the most progressive renewable energy standards in the country. The state currently sources almost 30% of its electricity needs through solar, wind, and other renewables. And they are aiming for 100% by 2040!
To meet these ambitious goals, legislators have passed new laws requiring utility companies to expand solar options. There are also strict renewable production quotas enforced on energy providers.
These regulatory standards, combined with dropping solar equipment prices globally, perfectly set the stage for Colorado‘s solar boom.
And the best part? All these solar incentives save regular homeowners like you and me some serious cash too!
Overview of Ways to Save with Colorado Solar
There are 3 main avenues to find financial incentives for going solar in Colorado:
- Federal tax credits and rebates
- State and local credits + utility incentives
- Additional exemptions/regulations
I‘ll cover each area in detail throughout this guide. But first, let‘s briefly summarize the types of solar savings and financing options available:
Federal Support
- 26% federal investment tax credit through 2032
- USDA rural development grants
Colorado State & Utility Support
- Up to $1,500 installation rebates
- Net metering bill credits
- Low-income solar grants
- On-bill financing programs
Additional Exemptions
- No sales or property tax on solar equipment
- "Solar gardens" subscription options
Taken together, these incentives, credits, rebates and financing programs can cover 50-100% of your total system costs. Keep reading to understand how to tap into all the available solar savings!
Federal Solar Incentives
Let‘s start with the most lucrative solar incentive available nationwide – the federal solar investment tax credit, also known as the ITC.
Federal Solar Tax Credit Overview
The ITC offers a dollar-for-dollar reduction in your tax liability equal to 26% of total costs for installing a solar system at your home. This includes the photovoltaic panels, inverter equipment, wiring and racking materials, labor, design, permits, and any other solar-related expenses.
So if you install a $15,000 solar system, you‘ll get over $3,900 automatically taken off your federal taxes owed!
Amount: 26% of total system cost
Eligible Expenses: Equipment, installation labor, permits, consulting, etc.
Deadline: Remains at 26% until end of 2032 then declines annually
Who Qualifies for the Federal Solar Tax Credit?
The ITC places no restrictions on eligibility – any homeowner who goes solar can claim it!
Whether you purchase a system outright or finance through a loan/lease, you still get the credit. And there are no income limits like some other incentives.
However, because it directly reduces your tax liability, the credit works best if you have sufficient federal taxes owed for the year.
If your tax liability is less than the amount of the credit, any unused portion can be rolled over to the following year. So the full value doesn‘t disappear if you can‘t claim it all at once.
Additional Federal Solar Support
Alongside the main federal ITC, U.S. homeowners can tap into a few other supportive federal programs:
USDA Rural Development Grants
If your home is in a designated rural area, you may be eligible for a grant covering up to 25% of total installed costs for a solar system plus battery storage.
Federal Renewable Energy Certificates (RECs)
For each 1,000 kWh your solar system produces annually, you‘ll earn one REC. These can be sold on secondary markets for anywhere from $1-$20 per credit.
Colorado State & Utility Solar Programs
Now that you understand the federal solar tax credit and incentives, let‘s shift our focus to specific solar programs provided here in Colorado.
The state boasts some of the best utility rebates and regulatory policies in the country – you just have to know where to look!
Xcel and Black Hills Utility Rebates
Two major energy providers – Xcel Energy and Black Hills Energy – offer some of the most generous solar rebates to homeowners who install a qualifying PV system:
Xcel
- Up to $1,500 rebate
- Developing new solar*rewards program for higher rebate rates through 2023
Black Hills
- $800 installation rebate
And remember – because these rebates come directly from your utility provider, they stack on top of the 26% federal tax credit!
Income-Qualified Solar Discounts
Some municipalities also offer special solar incentives if you meet certain low-income qualifications.
For example, Boulder County provides a Renewable Energy Rebate Program that covers 50% of the total cost for installing solar panels if you make below certain income thresholds.
You‘ll need to dig into the policy details for your specific city and county to see which low-income solar incentives may be available. But this can make going renewable incredibly affordable!
Net Metering
One policy offered statewide by all major utility companies is known as net metering.
This allows any excess solar energy your panels produce during the day to be directly credited towards your electricity usage during non-sunlight hours.
Over the course of a year, many solar homeowners actually generate MORE than they use. Net metering rolls over all these extra kWh month-to-month.
At the end of your annual billing period, some utilities will even write you a CHECK for any outstanding credits!
Community Solar Gardens
Can‘t install solar panels at your particular home due to roofing issues, HOA rules, or other limitations? No problem!
Colorado has over 100 community solar gardens you can subscribe to in order to access the financial savings from renewable energy.
You essentially reserve a portion of a large, centralized solar installation and get credited as if the panels were on your own roof!
Additional Colorado Solar Savings
Outside direct rebates and credits through the state and energy providers, you‘ll unlock even more subsidies by going solar thanks to:
Property/Sales Tax Exemptions
100% of solar equipment purchases and installation services are exempt from state sales tax and county property tax here in Colorado. This can save you thousands over a system lifespan!
On-Bill Financing Through Utility
New legislation requires utility companies to offer low-interest, no-money-down loans for installing renewable systems. This makes financing a breeze!
Let‘s Total Up Your Solar Savings!
Hopefully by now, your mind is buzzing with all the potential incentives available to you for installing a solar PV system right here in the Centennial State!
Here‘s a handy table summarizing the different credit amounts, rebates, and savings opportunities we just covered:
| Incentive | Overview | Est. Savings |
|---|---|---|
| Federal Solar Tax Credit | 26% credit on system cost | $3,900 on $15k system |
| Xcel Rebate | Up to $1,500 reward | $1,500 |
| Black Hills Rebate | $800 reward | $800 |
| Low-Income Discount | 50% system cost grant | $7,500 on $15k |
| Net Metering Credits | Annual excess solar credits | $100-$200/year |
| Sales & Property Tax Exemption | Solar purchases 100% exempt | $1,000-$5,000 |
Total Savings Potential => $15,000 on $15k system!
As you can see, incentives and credits can cover nearly 100% of your total solar installation cost here in sun-powered Colorado!
Now it‘s just a matter of researching providers, comparing bids, and selecting the right equipment package for your home.
Continue Your Solar Knowledge
I hope this guide has been insightful for showing you WHY Colorado is such a solar-friendly state and highlighting all the ways you can now cash in through incredible incentives!
Be sure to check out our other recent articles for more helpful info:
[Can You Recharge an Electric Vehicle with Solar Power?] [Owning an EV in Colorado: Charging, Costs & Incentives]Wishing you sunshine and savings ahead! Let me know if any other solar questions come up.
