Are Solar Panels Worth It in Colorado?

7 factors to consider before getting solar panels in Colorado

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including hundreds from Colorado. Here’s what to consider before making the switch:

1. Your energy consumption

2. Solar panel installation costs

3. How long you stay in your house

4. Colorado solar incentives

5. Net metering buy-back rates

6. How you pay

7. The solar company you hire

1. Your current energy consumption

A typical Colorado household needs a 11.5 kW system to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Look at your latest utility bills to see how much electricity your house needs each month. This tells you what size and capacity your solar system needs to be.

Once you know your current energy consumption, you can calculate your potential savings and the time it should take for your solar installation to pay for itself.

2. Solar panel installation costs

Average solar panel costs in Colorado are comparable to the national average. Please note, the table below does not include the cost of solar energy storage battery. Adding one can increase your total system costs by $7,000 to $18,000.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In Colorado, the average cost per watt is only $2.66.

Average solar panel cost by system size in Colorado

3. How long you stay in your house

It takes years for electric bill savings to make up for the upfront cost of solar — about 8.9 years on average in Colorado. If you move before then, you might not fully realize the financial benefits of your investment.

It's true that solar panels can increase the value of your home. But they can also complicate a sale. This is especially true if you lease your system, since the buyer may need to take over the contract.

If you think you’ll move in the next couple of years, you may want to consider a home improvement project with a better return on investment, like a kitchen or bathroom remodel.

4. Colorado solar incentives

The 30% federal solar tax credit has expired, but Colorado still has a few tax breaks and local incentives that can make solar more affordable.

• Property tax break: Adding a qualifying solar system generally won’t raise your property taxes.

• Sales tax break: Qualifying solar equipment is exempt from state sales tax.

• Battery tax credit: You can get a state tax credit worth 10% of the purchase price of a qualifying residential battery.

• Local rebates: Some utilities and cities offer extra savings. Boulder, for example, has rebates for qualifying solar and battery projects.

What’s available depends on where you live and who provides your electricity.

» MORE: Colorado solar incentives

5. Net metering rates in Colorado

Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. In Colorado, the rules depend on your utility.

Getting enrolled in net metering shouldn’t be too difficult. “There was a little bit of confusion with our power company on how they were modifying the process,” Donald in Colorado Springs told us. “Other than that, I’m really happy with my decision to go solar, and I’ve been tracking my system's performance carefully.”

If you’re an Xcel Energy customer, your extra power goes into a Solar Bank. You can usually either:

• Keep the credits: Unused credits roll over from month to month.

• Get paid at the end of the year: Xcel pays you for leftover power, but usually at a lower rate than what you pay for electricity.

Other utilities and co-ops have their own rules, so check with your provider to see how much your extra solar power is worth.

6. How you pay

If you can, it’s often financially strategic to pay for the whole thing upfront. You own the system from day one and you don’t have to pay interest on a loan. Of course, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• Solar loans work like any other type of home improvement loan. There’s an application and approval process. You pay it back over time (with interest) each month.

• Leasing solar panels lets you set up a system without the high upfront costs. Monthly payments usually range $150 to $250. Agreements last 20 to 25 years.

• Power purchase agreements is are similar to leasing. With a PPA, you pay for the electricity the system produces at an agreed-upon rate. Some contracts include annual rate increases, so check the escalator and total cost before signing.

» SOLAR PANELS: Lease vs. buy

7. The solar company you hire

People have mixed experiences with solar companies. In the best-case scenario, it’s easy to make the switch and you’re happy with the system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision.

Use NRL’s PVWatts Calculator to estimate how much electricity solar system 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.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support a solar panel installation. Here’s what to think about before you commit:

• How old are my appliances? The first step is to ensure that your electrical loads are as small as possible. If you have an older refrigerator or air conditioning unit, for instance, it’s smart to upgrade those before investing in solar panels. That way, you can get a smaller system, which will be cheaper overall.
• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Colorado averages 5 to 6.5 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? Colorado (and the rest of the United States) is in the northern hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels.

Pros and cons of solar panels in Colorado

It’s a common misconception that solar panels will completely eliminate your monthly power bill — this is not always the case. Still, you’ll likely be paying much less than you would for traditional utility bills.

Benefits of solar panels in Colorado

• Cheaper energy bills: The average homeowner in Colorado uses a lot of power, which adds up to a lot of savings when you switch to solar. Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower).

• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.

Drawbacks of solar panels in Colorado

Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Battery costs are generally between $7,000 and $18,000. With a battery, you can store energy at home instead of tapping into the local grid when you need to.

• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage. 

• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Colorado

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for the top solar companies in Colorado to learn more.

Colorado solar FAQ

Bottom line: Is going solar in Colorado worth it for you?

Going solar in Colorado might be easier than you think. The main obstacle to going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. For a lot of homeowners, it ends up being worth it as long as their cost savings over time outweigh the initial investment. Others are happy to go solar for the environmental benefits alone.

Solar costs vs. savings: Colorado and nearby states