How much do solar panels cost in Colorado?

With professional installation, a typical 8-kilowatt residential solar panel system in Colorado costs $24,240. That price drops to $16,968 after considering the full federal solar investment tax credit (ITC). Anecdotally, Jennifer in Golden, Colorado, paid $18,000, and William in Grand Junction, Colorado, spent around $20,000 to go solar.

The size of your solar panel system is a big factor in your overall solar costs. The average size of solar systems in Colorado is 9.27 kW (kilowatts). Depending on your household energy usage, you might need a smaller or larger system. As you can see, the cost difference between a 6-kW system and a 7-kW system is thousands of dollars.

Average solar panel installation cost by system size in Colorado

This doesn’t include the cost of a solar storage battery, which sometimes costs as much as the panels. Solar batteries are a must if you want real energy independence, especially if you go off-grid. Permitting, utility fees and maintenance also add to the cost of going solar.

Are solar panels worth it in Colorado?

Solar panels can be a great investment in Colorado. The state gets plenty of sunshine, especially in places like Pueblo, Denver and Alamosa, and solar radiation is better at higher altitudes.

Lots of residents tell us about significant savings on electric bills. For example, Paul in Colorado Springs, Colorado, said his electric bill is only $14 per month. Bryan in Denver, Colorado, only pays $4 since going solar.

We suggest using the National Renewable Energy Laboratory's PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery. 

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

It doesn’t work out for everyone, particularly if a lot of your utilities currently run on gas, like Charnay in Brighton, Colorado. Charney told us going solar was a mistake because it didn’t help to reduce her gas bill.

If your house is a good candidate for solar, it’s worth considering if you like the idea of lower monthly utility bills and more energy independence. On average, you’ll spend $10,605 to $30,300 for panels that last about 25 years. Over that same time period, you’d avoid approximately $53,986 in total utility costs.

» STILL NOT SURE? Solar energy pros and cons

Solar panel installation cost factors in Colorado

Going solar is an investment, and, like with any investment, it's important to know what you're getting into.

The equipment — solar panels, inverters, mounting hardware and other electrical accessories — is typically the largest portion of your overall total costs (approximately 25% to 50%). Labor, which includes planning, preparing and connecting your system to the grid, accounts for 10% to 30%. Local permits and fees are a small part of your overall costs.

Solar equipment

Most of your solar equipment costs come down to how much you pay for solar panels. You’ll hear installers talk about how “efficient” their panels are. Solar panel efficiency is a measure of how well a panel makes electricity. The more efficient the solar panels you buy are, the fewer panels you need. While more efficient panels cost a little more, you save by buying fewer panels.

Solar arrays also contain mounting equipment, wiring and other devices, such as inverters, batteries or a monitoring system. All these pieces add up, so make sure you're considering the whole package when you're budgeting. Here are a few common equipment costs:

• Solar panels: In general, monocrystalline panels are considered the best bang for your buck. Cheaper solar panels are typically polycrystalline. The difference comes down to efficiency and materials: Monocrystalline panels are made from pure, single silicon crystals; various silicon fragments melted together are used to make polycrystalline panels.
• Solar batteries: A battery stores energy for later use. It’s a must if you want real energy independence, and they sometimes cost as much as the panels. Prices often depend on the battery’s storage capacity, life span, brand and other factors. Expect to pay between $7,000 and $18,000, though some cost $30,000 or more.
• Solar inverter: Inverters convert the electricity generated by your solar panels from direct current (DC) to alternating current (AC). Inverter costs usually range from $1,000 to $3,000.
• Monitoring system: Some companies include a solar monitoring system to track how much energy your system produces and if there are any problems. If not, you can buy a stand-alone system for $80 to $400.

Size of your system

The cost difference between a 6-kilowatt system and a 7-kilowatt system is thousands of dollars. To estimate what size system you need, first look up how many kilowatt-hours (kWh) you used last year on your electricity bill. Divide that number by 1,200. This will be roughly the system size you need. For example, if your home used 30,000 kWh last year, you would need a 25-kW system.

» WATT’S THE DIFFERENCE? kW vs. kWh

Condition of your roof

Quality solar panels should last 25 to 30 years, so you need your roof to last just as long. Otherwise, you’ll have to pay to remove the panels, fix your roof and reinstall them again. This is a frustrating and expensive process you should avoid if you can. If you’ve been thinking about replacing your roof, it’s a good idea to do that before getting solar panels.

ConsumerAffairs often hears from disgruntled reviewers who felt blindsided by expensive roof repairs needed after their solar panel installation was complete. If you want to ensure a seamless and cost-effective solar journey, your roof must match the system's longevity. Get your roof inspected, fixed or replaced before you get a solar energy system.

Labor costs

Solar equipment costs are going down, but labor costs are higher than ever in some areas. Installing solar panels yourself might initially seem cheaper because you'll save on labor costs. However, it's crucial to consider several factors for safety before going the DIY route. If not installed correctly, solar panels pose safety risks, causing roof leaks and other problems.

Local permits and fees

Permits and interconnection fees, though relatively cheap, are worth mentioning. In the legislative session of 2023, the Colorado General Assembly enacted a bill aimed at standardizing and streamlining the permitting procedures across the state. This legislation stipulates that the maximum fee municipalities can levy on homeowners for such permits shall not exceed $500.

Good solar companies will often handle permitting on your behalf. You can also contact your municipality’s building department directly for accurate information.

» GREENEST STATES: Colorado ranked 36th in 2024

How to save money on solar panels in Colorado

There’s no way around it — solar panel installations are expensive. Here are some tips to maximize your savings on solar panels in Colorado:

• Compare quotes: Get quotes from at least three or four different solar companies in Colorado. This lets you compare different proposed equipment, pricing, financing terms and estimated energy production to find the best overall value. Don't just go with the cheapest option without vetting quality and services.
• Lower your electrical load: Before going solar, it’s smart to upgrade any old appliances. For example, replacing an old refrigerator with a more eco-friendly one reduces your electric load, which also helps lower your utility bill. If you use less electricity, you need fewer solar panels, making the whole system cheaper.
• Use incentives: Through the Energy Smart Colorado program, residential property owners within the municipal boundaries of Boulder, Eagle, Gunnison, Lake, Pueblo, as well as the surrounding counties, are eligible to receive assistance, rebates and financing opportunities. Some solar companies offer additional rebates on their products.

» MORE: Why are solar panels so expensive?

Solar incentives, tax credits and rebates in Colorado

Solar incentives in Colorado include property tax exemptions on the value your solar system adds to your house, sales tax exemptions when purchasing solar equipment and additional policies to encourage solar adoption.

The federal solar investment tax credit (ITC) is still the best financial incentive for going solar in Colorado. The ITC credits 30% of the system’s total cost — including equipment, labor and permits — toward what you owe on federal income taxes.

Don’t get confused: The ITC is not a rebate or a refund. It is a credit that goes toward what you owe on federal income taxes the year your system becomes operational. Any unused portion of the credit rolls over into future tax years.

The ITC drops to 26% in 2033 and 22% in 2034.

For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If you owe $15,000 in taxes, the credit reduces your debt to $12,000. The ITC only offsets your tax liability; you can't take advantage of it if you don’t owe taxes in the first place.

How can I pay for solar panels in Colorado?

Affordable financing makes the upfront costs of solar more manageable. For instance, most leases let you start saving from day one with little or no money down.

• Loan: A solar loan works like any other type of home improvement loan — there’s an application and approval process, and you pay it back over time (with interest) each month. In an ideal financing scenario, your system generates enough extra power to pay off the loan. Solar loan terms typically last eight to 20 years.
• Lease: Leasing solar panels is a great way to set up a system without the high upfront costs. A potential downside is that you are not eligible for the same tax incentives.
• Home equity: Using a home equity line of credit or loan to finance a solar installation can be a financially beneficial option — home equity interest rates are relatively low, and homeowners can still take advantage of the federal solar investment tax credit.
• Power purchase agreement: A solar power purchase agreement (PPA) is similar to leasing. A solar developer buys, installs and maintains solar panels on your property. You buy the power generated by the system on a per kilowatt-hour (kWh) basis. It’s a fixed price, and the cents/kWh is usually cheaper than the utility’s rate for the same amount of electricity.

» SOLAR PANELS: Lease vs. buy

Compare solar installation companies in Colorado

We compared ratings and reviews, equipment options, warranties, availability and other factors to pick the top solar companies in Colorado.

Bottom line

Residential solar panel system costs typically fall between $10,000 and $30,000 or higher, depending on factors like the system's size, local labor rates and available incentives. Colorado homeowners with solar panels can typically save more than that in total avoided energy costs over the lifetime of a system.

The ConsumerAffairs Research Team has conducted extensive research to compare the costs of going solar in Colorado and other states.

Solar costs vs. savings: Colorado and nearby states