As a Colorado resident, you may have wondered about the truth behind one of Colorado’s biggest tourist draws: its reported “300 days of sunshine” per year. This statistic intrigues both summer and winter sports enthusiasts, who envision hiking, rafting, swimming, skiing and snowmobiling through blindingly bright seasonal scenery. The reality is that the number “300” represents those days with at least one hour of sunshine, not a full 12-hour-long sun-fest. Colorado gets cloudy days, just like all the other states.
That reality hasn’t slowed the state’s enthusiasm for solar energy, however. Colorado does have fairly reliable solar exposure, and it has developed a significant solar power industry to take advantage of that consistency. As a state, Colorado has one of the strongest renewable resource standards in the country, requiring investor-owned utilities to source a full 30 percent of their energy from non-fossil fuel resources by the year 2020. (In 2013, only 17 percent of the state’s electricity was generated by renewable resources, so look for continuing investments and incentives in this sector of the economy.)
Homeowners benefit from solar power even when they are also connected to the “grid.” With a capacity of 300 megawatts (MW) of photovoltaic energy, Colorado’s “grid-tied” solar power system (a combination of systems that include both solar and grid energy resources) was the fifth largest in the country in 2012; 2013 saw net electricity generation from solar power increase by a further 20 percent.
Additionally, the state requires its urban utility providers (and some rural municipalities, too) to eventually source 3 percent of their energy resource from “distributed generation” suppliers. A home-based solar electric power system that feeds excess electricity back into the grid is called a “distributed generation” source for this purpose. Being a “distributed generator” of solar power means the state can compensate you when your system provides electricity for public purposes through your privately owned solar electric system.
Colorado’s incentive and rewards programs play a large part in the growth of the industry, too.
Xcel Energy “Solar*Rewards”
This program has been wildly popular. Xcel was forced to suspend it through all of 2013 because applications had already been received to fulfill all of the program capacity to that point. When it opened again in June 2014, it took only five days for applications to exceed the then-available capacity.
The program offers financial incentives to customers who install grid-tied solar electric systems that generate up to 120 percent of their homes’ energy usage. The renewable energy credits (REC) that are produced by the system are applied over the course of 20 years. The size of the REC payment is based on the size of the system and who owns it. Smaller systems (0.5 – 25 kW; applicable to most homes and small businesses) receive a lesser value REC than does a medium-size (25.1 – 500 kW) system.
The value of the incentive decreases as the MW capacity grows, so early investment will reap the highest returns. The program is still accepting applications but isn’t assigning a new REC amount until a final decision is reached on the new Renewable Energy Standard, expected in September 2015.
Property and sales tax exemptions
Residential photovoltaic installations are completely exempt from property taxes in Colorado when the system is used primarily to supply electricity to the on-site structure.
Additionally, renewable energy systems, including solar electric systems, are also fully exempt from sales and use taxes, at least until July 2017. The exemption applies to state-level taxes on trackers, generating equipment, supporting structures, inverters, towers and foundations, as well as balance-of-system components — wiring, control systems, switch gears and generator step-up transformers. The state also has legislated that local municipalities can exempt solar energy generation from their codes and tax bases. Many have elected to do that.
Community solar gardens
For at least six years, January 2015 through December 2020, property tax exemption is available to homeowners who participate in a “community solar garden.” The “garden” is a centralized solar panel array that delivers electricity to the grid, and its owners or lessees can receive tax credits for sharing that resource.
“Industrialization” costs are coming down too
For most people, a solar electric system works in conjunction with a public utility company. To ease access in these cases, Colorado has streamlined its permitting and other “connectivity” systems, so that homeowners can quickly and easily finalize the administrative details of their purchase or lease. Pursuant to the Federal “SunShot Initiative,” Colorado has identified 16 “Solar Friendly Communities,” each of which is working internally to increase the use of, and access to, solar power for its community members. Again, through the use of incentives, early adopters of solar power systems will see higher incentive rates than those who come on board later in time. The purpose is to increase the overall community investment in solar power.
Colorado’s focus on solar energy is commendable. Colorado has high fossil fuel reserves that have allowed it to keep its costs for publicly supplied electricity relatively low. However, the impact on the environment of those fossil fuels is becoming more evident in the country’s weather patterns. Colorado’s recognition of the increased need for alternative energy sources, and its strong investment in renewable energy sources like solar electric power, make it a pretty sunny state, no matter how many days a month the sun shines.
RGS Energy has almost 40 years of experience in installing solar energy systems throughout the country, in a wide variety of settings. To find out how solar energy could power your home, visit www.RGSEnergy.com.