Colorado solar panels: The complete guide in 2024

Data updated Jun 11, 2024

Written by: Emily Walker

Interested in going solar? You'll need to install a 9.21 kW solar panel system to cover the average electric bill in Colorado, which will cost you about $20,012 after the federal tax credit.

Cost for an average system in Colorado


Out of pocket cost, cash
$28,588
Federal tax credit (30%)
- $8,576
Price post tax credit
$20,012

20-year savings $17,489
Payback period 11 Years
Electricity offset 98%
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As long as your federal tax bill is high enough, you can take advantage of the federal investment tax credit (ITC).

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Going solar in Colorado

One day, it's blizzarding; the next, it's 80 degrees. Colorado's weather is pretty unpredictable– except when it comes to sunshine. Most Coloradans will tell you they see at least 300 sunny days each year, making it a great state for solar. 

Mix in Colorado's lucrative solar incentives, and it makes sense why so many Colorado homeowners are interested in adding solar panels. 

Here's what you should know about going solar in the Centennial State.

Cost

How much do solar panels cost in Colorado?

Solar panels will save you a lot of money over time, but the upfront costs aren't cheap. The average Colorado homeowner needs a 9.21 kW solar panel system to cover their electricity needs, which comes out to $28,588 before incentives. Prices range from $24,300 to $32,876 before incentives. After the federal tax credit, that drops by 30%, and Colorado has some local incentives that bring down the cost as well. 

While this may sound high, it will usually pay off in Colorado. That's why over 26,000 Colorado homeowners have used EnergySage to receive and compare quotes for solar installations. You can expect to earn back your initial solar investment through electricity savings in about 11.44 years, while most systems last at least 25 years. You'll often see this number referenced as your solar payback period.

There are a few ways to finance your solar panel system so you don't have to provide all that money upfront. 

  • Cash purchase: You'll own the system and pay for it upfront. This provides the best long-term savings. 

  • Solar loan: This allows you to retain ownership of your system while owing little to no money upfront. Solar loans aren't all created equal. If you have access to subsidized clean energy loans through local incentive programs, that's usually your best bet. A home equity loan or a personal loan are often your next best options—private solar loans typically come with higher interest rates or upfront fees.

  • Solar lease or power purchase agreement (PPA): A third-party company owns your system and either leases you the solar panels (solar lease) or allows you to purchase the electricity they generate (PPA). These generally provide the lowest savings and generate the most negative press about solar. If you choose this financing option, read the fine print: You can get trapped in them for longer than you'd like.

Solar panels on a house

Incentives

What are the best solar rebates and incentives in Colorado?

Incentives help bring solar's price tag down considerably in Colorado. Here are the major ones to know about:

Incentive
Average savings in Colorado
Description

Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)

$8,576

Lowers your solar panel system's cost by 30%

Colorado Residential Energy Upgrade (RENU) Loan

Varies depending on how you finance your system

Provides 20-year, low-interesting financing up to $75,000 for home energy upgrades including solar panels

Local incentives & rebates

Up to $7,000 for solar

Depending on your utility company and where you live, additional incentives may lower your system's cost

Colorado solar sales tax exemption

2.9% of your system's cost

You don't need to pay any sales tax on new solar panel systems in Colorado, saving at least 2.9% of your system costs.

Colorado solar property tax exemption

0.6% of your system's value annually on average

If you use solar energy as a source of power, you won't need to pay tax on the value your solar panels add to your property. Colorado’s average property tax is 0.6%

Is net metering available in Colorado?

In some states, you'll earn bill credits from your utility company when your solar panel system generates excess electricity and sends it to the grid. This incentive is known as net metering—basically a solar buyback program—and makes it so you will owe very little, or even nothing, on your electric bills with solar panels.

All major utility companies in Colorado offer net metering, but each one's policy is a bit different. Any utility with less than 5,000 customers isn't required to offer net metering at all.

A house with rooftop solar panels connected to the grid

Equipment

Equipment quality

Each year, solar panels get more and more efficient—that is, they produce more power per square foot. As of 2024, the most popular solar panels can produce about 400 watts of electricity when they’re in full sunlight. If you want to make the most of your roof’s solar potential, get panels with at least that much power output.  

You should also make sure to select a solar inverter setup that makes sense for your roof’s layout. 

And if you want or need a solar battery, be sure to pick one that can integrate cleanly with that inverter. 

Premium equipment can come with a high price tag, but it will often save you more money in the long run. The best equipment tends to have the best warranty terms, often guaranteed to 25 years (sometimes even 40!), so you’re covered in case you need repairs or replacements. The highest-quality panels also degrade more slowly, so they’ll maintain more of their power output further into the future.

See our list of the best solar panels

resources

Top solar resources for Colorado

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