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There’s a keen interest in solar power in Colorado, which is not surprising as it’s the 6th sunniest state, just after Texas and California.
The aim of this post is to find out if solar is worth it in Colorado, providing installation costs, exact sunshine energy you can expect and the solar payback period.
In general, solar is worth it in Colorado. Several utility companies have generous rebates for solar purchases. The combination of the Colorado state sales tax exemption, the property improvement tax and the Federal Solar Tax Rebate make solar worth it in Colorado, with a payback period of 11.5 years.
You’ll find out:
- How many kilowatt-hours of solar energy the average Colorado home needs
- How solar panels and associated equipment is installed
- What does it cost to install a solar system in Colorado?
- Are there maintenance costs associated with solar?
- How much energy in kHh can a solar array generate in Colorado?
- Correct solar panel sizing for the average Colorado home
- Do you really save money with solar panels in Colorado?
- What are the main components of solar PV system?
- How does a standard grid-tied solar PV system work?
- Are solar panels worth it in Denver, Colorado?
- Does adding solar panels increase home value in Colorado?
- What environmental factors affect solar panel efficiency?
- How to measure your home energy use in Colorado
- How many solar panels do I need for my home in Colorado?
- What happens to solar when power goes out?
- What do home solar systems cost in Colorado?
- Energy Consumption & Solar System Statistics For Colorado
- Related Questions
Do you really save money with solar panels in Colorado?
A solar panel installation is the way of the future. It’s clean, saves resources and saves you money!
Let’s take a look at some essential before diving into the specifics of your state:
Note: If you know all you need to know about solar power, go to the Page Menu below and scan through the post sections.
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What are the main components of solar PV system?
You’ll need local permits to install a grid-tie system, which is the most common type for home-owners. Such a system connects to the power grid and of course needs to be done professionally.
Grid-tie solar power installation equipment
- Correctly sized Solar panels and aluminum mounting rails for roof installation
- Solar string inverter for converting DC to AC (you may need more than one)
- Interconnecting DC and AC Cables plus junction boxes
- Circuit breakers and other safety devices
- A Net-meter (keeps track of the power in and out of the utility grid for consumer credits and debits)
- Batteries for home energy storage (this is a must if considering an off-grid system))
The video embedded underneath this text records a typical solar PV system installation and and runs for just 12 mins. It shows all activities from beginning to end, so it’s a great insight into what happens when you have solar panels installed on a property roof.
The solar panels fitted on this house were equipped with micro-inverters. These differ from central, or string inverters, in that they control the voltage conversion at the panel level. Inverters change the DC voltage produced by solar PV into AC used by most homes. Inverters are an essential part of all solar systems
Micro-inverters are fixed to each panels back plate and are generally considered to be more efficient. Most residential solar installations still use string inverters, which convert the voltage generated by a group of up to 10 panels wired together.
- A post on this site, How Solar Inverters Work, goes into more detail about inverter operation.
- This post explains grid-tie solar system design, and was written by our resident DIYSolarShack expert – designing a solar system.
Do solar panels ever have to be replaced?
All solar panel manufacturers give warranties of between 20 to 30 years, in general. Incredibly, they can go on working for many years after that, up to 50 years of meaningful production. The panels are very durable.
Output power does fall off as the solar cells degrade, but at a rate of only 0.5 to 0.8% per year.
The manufacturer specification sheet will detail the warranty conditions. It often specifies 90% production after 10 years use and 80% after 20 years.
The home owner is also covered by equipment warranties for associated equipment, so if an essential part like an inverter fails within a certain time period, it will be replaced. (Normally 5 years)
Inverters don’t last as long as solar panels, generally having a warranty period of 12 to 15 years. Microinverters and power optimizers are more compact, have less electronics and last about as long as the panels, thus they have a longer warranty period.
How does a standard grid-tied solar PV system work?
Solar Connection Diagram
The black arrows in the above drawing DC voltage flow before it gets converted to AC by the inverter. The red arrows indicate AC power flow. The green arrows are meant to show that current can flow from the utility grid in the normal way.
Note: The Net Meter at the top right hand corner is there to measure the flow of current both from, and to, the grid. That’s the cool thing about a modern grid-tied solar system – power generated at peak times is fed back into the utility grid!
How does the federal tax credit work for solar panels in Colorado?
What is a federal solar tax credit?
The solar tax credit is put in place by the government so that a home-owner can claim back a percentage of the capital cost of a solar system.
You simply enter in the following year’s IRS return and your tax liability is offset ‘dollar-for-dollar’. If your tax rebate is $1500 and you owe $4000, then you pay just $2500.
Example: The federal solar tax rebate in 2021 has been maintained at 26%. If your home solar system cost $18000 to install, then your tax rebate is calculated like this:
18000 x 26% = $4680 rebate against federal taxes
The rebate was 30% in 2019, decreasing to 26% for 2020 through 2021 and down to 22% for systems installed in 2022.
The tax credit is set to expire in 2024 unless it is extended. There’s a good chance that this will happens as President Biden has recently announced a long-term commitment to renewable energy (April 2021)
Source: Federal Solar Tax Credits
Colorado is right up there with sunniest states and is a great place to make a solar investment. There’s no state-wide solar incentive, but some counties and individual utility companies run their own schemes.
Eagle County runs one such program, while the power companies listed below have interesting rebate policies:
Colorado was one of the first states to pioneer community solar, a scheme enabling people who don’t own their own homes to participate in the solar revolution by subscribing to solar installations in another location.
Other perks include the sales tax exemption on the purchase of a renewable energy system and the exemption of the property tax normally due if your home’s values increase due to construction improvements.
What are solar buy-back rates in Colorado?
Utility companies run various buyback or rebate programs and these vary across Colorado.
What is the average payback period for solar panels in Colorado?
Solar is a great saver in sunny states and Colorado is no exception – the average solar payback period is just 11.5 years. After this period you’re home free, with free power!
How do you calculate payback period for solar panels in Colorado?
A simple calculation can be done by dividing the capital cost of installing solar panels (minus tax credits and rebates) by the annual savings.
A very useful website, Global Solar Atlas, can give us the irradiance value for any location.We need this to be able to determine the solar panels output. The value of irradiance is measure in kilowatt hours per m2 per day or year, but it’s commonly know as Peak Sun Hours.
Are solar panels worth it in Denver, Colorado?
Solar Payback Calculation For A 5kW Solar Installation In Denver Co (2021)
- City: Denver Colorado
- How big is the solar system?: 5kW
- Solar installation capital cost = $17000 – 26% federal tax credit = $12580
- Irradiance at Houston, Tx = 2173 Peak Sun Hours
- Power produced by solar panels = 2173 x 5kw = 10865 kWh(kilowatt-hours)
- Houston residential electricity cost per unit = 11.05 cents/kWh
- Annual savings = solar production x elec cost = 10865 x 11.05 = $1200
- Solar payback period Houston, Texas = solar cost/yearly savings = 12580/1200 = 10.5 years
Does adding solar panels increase home value in Colorado?
The jury’s still out on whether solar increases a home’s value. Is solar power worth it from this point of view? Lobbyists for the industry obviously say that it does, while naysayers may be speaking from personal experience, where other factors could have influenced their home value.
My take is this: If a home’s value didn’t increase because of solar, why would there be property tax exemption in force for the improvement?
What environmental factors affect solar panel efficiency?
Are solar panels worth it in every state? Power output is affected by several factors, some of which are just out of our control.
The tilt angle has an impact, as does the level of shading from nearby obstacles; other factors we can’t control, like rain, cloud or fog.
These are the main factors affecting solar performance:
- Irradiance (The peak sun hours). It’s a measure of the sun’s energy falling on the panels.
- Shade. Solar panel need open situations with no shading for maximum performance.
- Cleaning. Output losses of up to 15% can be avoided regular maintenance.
- The best quality solar panels give the highest output.
- Direction. Solar panel orientation should be due South for best results (Northern Hemisphere).
- Tilt. The most efficient title angle is 60 degrees for fixed panels.
- High Temperature. Space between panels is essential to reduce losses due to over-heating.
What orientation is best for solar panels in Colorado?
The optimum direction to point a solar panel array in the Northern hemisphere is South, but it’s not a game-changer if your roof does point that way. Installers are very good at finding innovative ways around such problems.
Solar panels can be directed South East or Southwest, and even towards the West or the East. The only direction frowned upon is North, because of the lack of direct sunlight.
What is the best tilt angle for solar panels in Colorado?
45 degrees is generally a good installation angle that gives good production all year round if your solar panels will be fixed in place, which is common for roof mounting.
Some installations have tilt angle adjustment, a really good feature offered by some installers. The summer setting for such a system would the location latitude minus 15 degrees. The winter adjustment should location latitude plus 15 degrees. This will help optimize solar output over the year.
For Denver this would mean a summer angle of 24.74° and a winter title angle of 54.74°.
The following table illustrates the difference in output over 12 months for Houston, Texas when a tilt angle of 60 degrees is applied. The value is compared with the production when panels are mounted ‘flat’.
Peak sun hour values 12 months for Denver Colorado – power output Vs Tilt
Insolation by month for Denver Colorado by month (kWh/m2/day - also are known as Peak-Sun-Hours)
Sun-tracking can be used to keep the solar panels facing the sun’s rays at all times and can increase output by up to 40%. However, such a system can cost up to 25% of the overall installation cost and is not really cost-effective for small domestic solar systems.
If more power is needed, then more panels can be added at much less cost than a complex sun-tracker.
To recap, the peak sun hours in any location determines the amount of power that a solar panel will produce. This information and your home’s energy consumption is used to size your system.
How to measure your home energy use in Colorado
It’s a tedious task trying to assess individual appliance energy consumption. For some appliances it’s easy, but others, like HVAC, fridges and freezers, are problematic because they contain compressors with motors.
Motors have surge currents which are higher than the running power and also run in cycles – sometimes they are off, sometimes on.
The bets way to assess your home’s energy usage is to take it from the previous year’s utility bill. The installer will use this in combination with your location’s irradiance to correctly size your solar system.
How many solar panels do I need for my home in Colorado?
Calculating your solar system size
Modern-day solar panel power output can be between 225 to 375 watts. When using the calculator, remember that the panel size should be entered in kilowatts – this means 275 watts should be entered 0.275 watts.
I discussed the various losses associated with solar electric PV and the calculator will deduct average losses for domestic solar installations.
Go to the site Global Solar Atlas, to find the peak sun hours for city. Enter this value and the calculator will find the number of solar panels needed for your location and energy consumption.
Note: For guidance only – a professional installer will be more accurate.
What are the costs associated with solar panels in Colorado?
Permits & Inspections
It’s possible to save up to 50% of the installation cost by doing it yourself. Of course, you would need help with the bureaucracy and technical expertise for grid connections, etc.
What happens to solar when power goes out?
A grid-tie solar system is automatically disconnected from the grid in case of outage. This is a safety feature to protect workers that may be repairing the line. The measure is termed ‘anti-islanding’ – islanding describes a solar installation that operates when the grid is shut down, a dangerous situation.
What do home solar systems cost in Colorado?
Average profession installation costs for home solar in Colorado is $3.13 per watt (2021), making the average cost of a 5kW system $15650 without rebates or other incentives.
Energy Consumption & Solar System Statistics For Colorado
Average kWh used per month
Ave kWh used per day
Peak-sun-hours per day
Solar output required to cover 100% energy used (kW)
Installation price Per Watt ($) 2021
Is solar worth it right now?
With the average payback period of 11.6 years, solar is worth it in 2021 going forward. There’s a strong possibility that the government and state commitment to all things renewable will ensure low installation prices for some years to come.
Is going solar worth the money?
Your annual solar energy production is calculated by multiplying the total watts of your system by the peak sun hours.
Multiplying the amount of solar energy produced by the unit cost gives you annual savings. If you divide the capital cost of your system by the amount of dollars saved each year, you will find how many years it takes to cover the initial cost.
This is will tell you if solar is worth it in your state, but don’t forget to factor in the federal tax rebate and any state incentives.
Government Guide – Solar Tax Rebate:
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