Colorado Solar Incentives: Five Things Residents Need to Know
Colorado residents are prime candidates for home solar power and energy efficiency. With recent advances in solar technology, lower solar system prices, and attractive incentives there’s never been a better time to take advantage of the state’s abundant solar energy. You can lower or erase your electric bill and invest in your home’s energy future. Here are five tips to help you when investing in solar power for your Colorado home.
5 Things to Know About Colorado Solar Incentives
- Federal Investment Tax Credit (ITC)
- Colorado Utility or City Incentives
- Colorado State Sales Tax Exemption for Solar Power Systems
- Colorado State Property Tax Exemption for Solar Power Systems
- Net Metering and Power Purchasing Agreements
Colorado is renowned for its “300 sunny days” per year. This fact alone is reason enough for Colorado homeowners to take a close look at investing in a home solar power system to reduce their utility costs. To make investing in renewable solar power even more attractive, the federal government is offering a 30% Investment Tax Credit against the total price of an installed system. Depending on which local utility service area and/or municipality your home resides, you may also be eligible for incentives and rebates. Additionally, thanks to advances in technology and manufacturing processes, the price of residential solar panels and inverters have never been more affordable.
There are several methods for adding solar energy to your home. You could purchase a system outright, finance your system with any of several loan options, or lease from a third party. Home solar power is a viable, clean, renewable energy solution that continues to rise in popularity, affordability, and accessibility.
So, how do you take advantage of solar energy in Colorado? This article will provide you with a quick breakdown of options and incentives to help you capitalize on your solar potential. For a more in-depth look at the nuts and bolts of what investing in a home solar energy system looks like check out the Ultimate Guide to Solar Power for Homes.
Federal Investment Tax Credit (ITC)
While the State of Colorado no longer offers tax credits for residential solar, the federal government still provides a 30% Investment Tax Credit for home solar power systems. You can take the total cost of your solar system installation, and apply 30% to your tax liability for the year:
(Cost of Installation) X .30 = $ Tax Credit.
Important note: This is a tax credit, not a cash rebate.
Now is a great time to take advantage of the 30% ITC. This ITC will not last forever; it holds steady at 30% through 2019, after which there is a gradual decrease until the credit ultimately reaches a cap at 10% in 2022. To maximize your ITC percentage, be sure to act before the end of 2019.
Colorado Utility or City Incentives
Colorado no longer offers state tax credits for solar energy systems. This is largely because the costs of solar panels and inverters have dropped dramatically over the time. The affordability of home solar power is now better than ever.
Depending on your local utility and/or municipality you may still be eligible to receive some form of incentive or cash rebate. Whether you live in Denver or Boulder, your solar energy contractor will be able to tell you the available rebates and financial incentives in your area. It all depends on where you live and what your utility offers.
For example, grants for home solar installations are still an option for qualified Boulder homeowners. Depending on resource availability, a grant may cover up to 50% of the home solar power system costs after the ITC and other rebates are applied. Similarly, many utilities across Colorado offer either fixed cash rebates or a certain amount per watt installed for home solar systems. Request information from your utility about home solar power incentives— you may be pleasantly surprised.
Important information for Denver residents: Xcel Energy currently does not offer these types of incentives for home solar listed above, though with the ITC and other options such as net metering, opportunities for home solar power are more attractive than ever. To learn whether your utility or local municipality offers solar incentives, your best bet would be to research solar installers in your area.
Colorado State Sales Tax Exemption for Solar Power Systems
Though the state tax credit is no longer an option for Colorado customers, solar power systems are exempt from related sales and use taxes. Once again, depending on where you live in Colorado, this can represent at least a savings of 2.9% on the cost of your solar modules, inverters, racking, wiring and other components. Again, look to your local solar professional to explain the details.
Colorado State Property Tax Exemption for Solar Power Systems
One significant benefit of a residential home solar power system is that it increases the value of your home— without affecting your property taxes. Colorado homeowners are not penalized for increasing the value of their homes through the addition of solar power. 100% of your renewable energy system value is exempt from Colorado property taxation. Win-win! Increase the value of your home without paying a penalty. If you choose to sell your home, the value of the solar system will improve your listing price.
Net Metering and Power Purchasing Agreements
There are various types of metering and purchase agreements available, depending on your location, budget, and solar energy goals. These options will determine how your surplus energy is handled, and how much money you pay up front for your solar installation.
Denver residents take note: Xcel Energy offers a net metering package for residential solar power. Here’s how it works: When solar customers generate more electricity with their solar photovoltaics in a month than the electricity they consume from Xcel Energy, they receive a payment from Xcel. With proper sizing of your home solar energy system and monitoring your energy use, it’s conceivable that you could end up being more of an energy producer than strictly a consumer. When you consider the monthly savings – or earnings – over the twenty-five years plus lifespan of your home energy system, with net metering the payback can be a matter of just a few years.
Not in Xcel territory? You’re not necessarily out of luck; other utilities offer attractive net metering options. Once again, check with your utility or make an appointment with your solar contractor to get the most current details about what your utility company has to offer.
Power Purchasing Agreement – PPA
Another option for some Colorado homeowners is to enter into a power purchasing agreement with their utility. One way to think of a PPA is to imagine that your home solar power system is like a mini utility company which produces power and sends it into the grid. With a PPA, you enter into a contract with your utility where they offer you a set price to purchase the electricity generated from your home’s solar system that a third party owns and installs. One attractive advantage to a power-purchase agreement is that the third party owns the solar panels, inverter and system components – with very little (if any) out-of-pocket costs on your part. Essentially you get paid for the use of your roof space. It’s conceivable that your system will earn several thousand dollars over the life of the system. Plus, the system maintenance and troubleshooting are taken care of by the third party.
Your Best Source for Understanding Colorado Solar Incentives?
Though there may not be Colorado state tax incentives for residential solar power systems, there are many attractive solar rewards for homeowners with home solar energy system in place. Working through the nuances of credits, solar rebates and incentives, net metering, PPA’s, own, lease or lease-to-own can be confusing at best. Sorting the details may take some time, but it will pay off in the long run. The sun is here for keeps, and you can’t go wrong taking advantage of solar energy in Colorado.
A surefire approach to learning about your available Colorado solar incentives would be to get in touch with your local solar energy professional. Their business is solar and they know all of the incentives and options available to you across the board.
In Colorado, you can count on the federal ITC to hold at 30% for another year, gradually declining to 10% in 2022. You will increase the value of your home with solar, without paying more property tax. You can trust the excellent quality and state of solar components – they have never been more affordable or reliable at turning the sun’s energy into electricity.
Local municipal utilities are also a helpful source of information. Call and ask about their solar incentives specific to your location. To boost the solar industry, each Colorado utility is required to produce a certain percentage of power through renewable energy to comply with the Colorado Renewable Energy Portfolio Standards. It is in the utility’s interest to help you help them meet their goal. Either check out your utility’s website or examine your next monthly bill– each should have solar resources available to consumers.
You have many options for adding a solar energy system to your home. You can choose to buy a home solar power system or decide to lease one instead. You can partner with your utility company through net metering or enter into a power purchasing agreement with a third-party solar provider. Ask your solar energy installer to spell out your options detailing the pros and cons of each option. Your solar professional is qualified to help you make the choice that serves you best. Now is the time to take advantage of the abundant solar incentives in sunny Colorado.
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