Buying solar panels in Denver, Colorado: Is it worth the cost?

If you’re a homeowner in Denver, Colorado, and you’re looking to save money on your monthly electricity bills while investing in clean power – going solar may be the right choice.

Colorado is considered one of the best solar states in the U.S. With a goal to have 100% carbon-free emissions by the year 2050, more programs and incentives are being offered by the state and utilities to ensure that investing in home renewable energy projects is affordable.

Thanks to solar incentives and low prices, you can get sky-high solar savings in the Mile High City. But is installing solar panels on your Denver home the right investment for you?

How much do solar panels cost in Denver?

An average-sized solar system in Denver costs about $10,900, including the 30% solar tax credit. That works out to around $2.60 per watt of solar installed before incentives.

Off the bat, this looks like a lot of money. However, this total is far below the national average cost of $3.03 per watt. 

The cost of installing solar panels in Denver will vary depending on how many solar panels you install:

System size	Cost (before tax credit)	Cost (after tax credit)
4 kW	$10,400	$7,280
6 kW	$15,600	$10,920
8 kW	$20,800	$14,560
10 kW	$26,000	$18,200

What rebates or incentives are available to solar customers in Denver?

Lucky for residents, Denver has solar incentives and rebate options to help lower solar system costs even more and make getting a system more affordable. Incentives such as:

• The federal solar tax credit

• Net metering

• Tax breaks

• Denver Solar Rebate Program

• Solar*Rewards from Xcel Energy

The federal solar tax credit

The federal solar tax credit is available to anyone in the U.S. who installs solar and has a taxable income. The tax credit is equal to 30% of the solar installation costs. 

Right now, the tax credit is the highest it will ever be. After 2032, the tax credit value will lower each year until it expires completely in 2035.  So, if you want the best deal for your system, the time to go solar is now!

The solar tax credit also covers battery storage.

Net metering

The state of Colorado has an excellent net metering program that compensates customers for any excess energy generated by their solar system and sent back to the power grid. By law, the state requires investor-owned utilities (IOUs) to offer net metering to their customers. 

If you’re a Denver resident, it’s likely you’re a customer of Xcel Energy. Xcel’s net metering program compensates customers for any excess solar energy their panels generate and send to the grid. 

There are two options for excess credits sent to Xcel: let them accumulate and cash them out at the end of the calendar year at a rate lower than the full retail rate of electricity, or let the credits roll over indefinitely. Homeowners can get the best savings by choosing the Continous Roll Over Credit option, but you won’t get paid out if you move or terminate your service.  

Tax breaks

The state of Colorado offers sales and property tax exemption for residential solar projects. Thanks to the property tax exemption, adding solar to your property will raise the value of your home – but your property taxes will remain the same. 

You also will not be charged sales tax for any solar equipment you purchase for your home. This can save you hundreds – potentially thousands of dollars. 

Denver Solar Rebate Program

The Denver Solar Rebate program is designed to help families who make less than the area median income and otherwise can’t afford to go solar on their own. 

An $8,000 rebate is provided to income-qualified households to install a rooftop solar system. The system cannot exceed a size larger than 7 kW or exceed 110% of the 12-month history of electricity use.

The program is extremely limited, and there are specific steps and eligibility requirements you must follow to qualify. 

Solar*Rewards from Xcel Energy

Low-income Denver residents serviced by Xcel Energy can take advantage of a program known as Solar*Rewards.

Income-qualified customers can receive a rebate of $1 per watt installed for systems up to 7kW. 

That’s a maximum incentive value of $7,000! When combined with Denver’s low-income program, nearly the entire cost of going solar can be covered for low-income homeowners. 

Xcel Energy Battery Connect

Xcel Energy also has a virtual power plant program called Battery Connect.

Customers can receive an upfront incentive of $500 per kW of battery output that can lower the cost of a Tesla Powerwall or SolarEdge battery. Homeowners can participate in the program for five years, and will receive $100 each year they participate.

In exchange, Xcel has access to the battery and can discharge it when demand on the grid is high. The battery can be discharged up to 60 times per year and will not be discharged past 40%. 

If helping your community and having back up power for your home is something you're interested in, Battery Connect is worth considering!

What is the payback period for solar panels in Denver?

The average payback period for home solar installations in Denver is 7 to 9 years.

The payback period is the time it takes to break even on your investment. Comparing payback periods of various quotes will help you determine when your solar panels will start earning you money. Payback period is calculated by looking at:

• The installation cost

• Any solar incentives and rebates you qualify for 

• The system size you choose and the equipment needed

• Average monthly electricity costs

• Estimated power generation

When you can identify the total cost and divide it by the annual financial benefits, you’re left with the number of years in your payback period.

How much energy do solar panels produce in Denver?

The average solar system in Denver will generate about 784 kWh of electricity each month – enough to cover the average home’s electricity usage!

How much energy will different-sized solar systems produce? Check out the chart below!

System size	Average monthly energy production
4 kW	548 kWh
6 kW	784 kWh
8 kW	1,045 kWh
10 kW	1,287 kWh

What are the benefits of going solar in Denver?

• Electric bill savings: With a $118 average monthly electric bill, you can expect net savings between $23,496 and $28,717 over your solar system’s lifespan. Remember, your actual savings will vary for you based on your specific circumstances. 

• Energy independence: Going solar reduces your reliance on your utility grid for power, taking your energy into your own hands! Pairing your solar system with battery storage can make your home even more independent!

• Reduced environmental impact: In the United States, a staggering 73% of harmful greenhouse emissions come from the use of fossil fuels, like coal and natural gas, that are used to generate power. Going solar can reduce your carbon footprint by 100,000 pounds during the lifespan of your solar system.

• Financial security: In addition to the cost savings and returns you receive from net metering and other incentives, you will see an increase in your home’s value, and you’ll be protected against energy rate hikes in the future. This helps achieve financial security, which is important for your peace of mind.

Are the weather conditions in Denver safe for solar panels?

Colorado is known for pretty harsh winters and lots of snowfall. Can solar panels hold up in these conditions? The short answer is – yes!

In fact, Environment America ranked Denver at 12th among U.S. cities based on the installed solar power capacity. The city also experiences plenty of days of sunshine each year, so you can get good use out of your solar panels!

As for snowy conditions, have no fear! Solar panels from reputable brands are built to withstand certain levels of extreme weather. But, if you have solar panels covered in snow, don’t expect them to generate energy. You usually don’t have to wait too long  - just let gravity do its job, wait for it to melt, or clean them off yourself!

Are solar panels worth it in Denver, CO?

Yes indeed! With the combination of low installation prices, excellent net metering, and a good payback period, investing in solar energy in Denver can be worth your while.

You may be thinking, how do I get started?

Be sure to check out top-rated solar companies in your area. They will have intimate knowledge of the local climate, government regulations, and the building and electric codes for your home.

Local installers will also understand Denver’s permitting requirements, which will help prevent any delays in your installation. Also, get multiple quotes and look into different financing options to find what works best for your home and wallet.

If you’re still unsure about solar being the right option for you, put your home information into our solar calculator to learn more!