What’s the Cost of Solar Panels in Colorado in 2022?

As the sixth sunniest state in the US, Colorado is a great place to go solar. Also, 2021 is the last year to take advantage of some incentives and rebates that decrease the cost of solar panels in Colorado. So you might be exploring all the options Colorado has when it comes to solar power. 

To help you in the process, we’ve prepared this article with all the essential information you need to approach the purchase of your solar array in Colorado. You’ll find how much you can pay for a solar system in Colorado, the power output you can expect, and much more!

How Much Do Solar Panels Cost in Colorado?

Most solar companies in Colorado charge an average of $3.13/W, which means that the solar panels Colorado cost ranges between $13,302 to $17,998. Considering these numbers, the gross price should be around $15,650. Notice that the net cost for solar panels will be a lot less once you apply the 26% Investment Tax Credit (ITC) plus other state incentives and rebates.

Having said this, calculating the cost of solar panels in Colorado or any other state isn’t an easy task and doesn’t depend solely on the panels. You need to consider the solar company, the panels’ quality, the electricity you consume, and the list goes on. 

So, while it’s virtually impossible to be 100% accurate about the price without looking at all the variables, you can get an estimate of the Colorado solar panel pricing for your home by looking at the size of the array that you need. For example, a 7 kW costs $21,910, whereas, for a 5 kW array, you can expect to pay $15,650.

Still, each company offers different quotes for the installation process. The best way to ensure you’re getting a competitive bid is to explore every solar company (or at least the best-rated ones) in Colorado. Ask for their services and compare them to see if the price reflects in the work they do.

What Energy Output Can I Expect from Solar in Colorado?

Besides having an average of 245 sunny days per year, Colorado is also high in the mountains, two variables that pave the way for excellent power output in solar panels.

On average, the state of Colorado receives 5 – 6.5 daily peak sun hours, producing 6,468 to 7,015 kWh per year. However, the actual output of your solar array will depend on other factors as well.

Size of System

In addition to peak sun hours and the efficiency of your panels, the size of the solar system directly influences the energy output. When we talk about a system’s size, we refer to the solar panels’ capacity to produce energy and not the physical size of the panels. For example, a 500 watt solar panel system can produce 500 watts of electricity; a 6-kilowatt solar system (6000 watts) produces 6000 watts. Beware that solar panels suffer a loss of sunlight during the day due to adverse weather conditions. So, the actual output won’t be 500 or 6000 watts but around 10 to 20% less.  

Choosing the size depends on what appliances you want to run on solar and their power ratings. You won’t need a large solar array to power laptops or iPads, but you’ll need a bigger one to run larger appliances like an AC

Equipment Needed

Most homeowners approach solar energy with limited know-how and believe that solar panels are the only component in a solar system. While these are the heart of solar energy, they are far from the only piece of equipment you need to take advantage of solar benefits. You need a basic triad to ensure a maximum output: good solar panels, batteries, and charge controllers.

Size of Battery 

You won’t fully harness your solar panels’ output without a battery. During peak sun hours, your panels will produce more electricity than you’re using at the moment. Instead of losing that extra energy, you can store it and use it later if you include batteries in your setup. Besides storing energy, batteries are a great addition to keep running appliances when there’s no sunlight—especially the ones you need to keep running all day and night, like refrigerators. 


You can have the best solar panels and batteries, but they can only do so much without a proper controller. Solar charge controllers regulate the amount of energy the battery receives from your panels after achieving an optimal voltage, preventing it from overcharging and undercharging. In a few words, without a suitable controller, you will lose a lot of power. 

Colorado Solar Incentives & Tax Credits

You’ll find excellent incentives and rebates to reduce the cost of solar panels in Colorado. 

Local Solar Rebates

Colorado utility companies offer cash rebates to homeowners who want to install solar on their property. Below you’ll find two popular incentives available in Colorado, but make sure you explore all your options as there are many more: 

  • EnergySmart Colorado: Depending on where you live, EnergySmart Colorado offers rebates from $400 to $3,000 to solar installations on homes in Eagle Valley, Roaring Fork Valley, and Summit County.
  • Holy Cross Energy: Offering a per-kilowatt (kW) rebate to reduce the cost of going solar. The incentive is $750 for the first 6 kW, $335 per kW for the next 6 kW, and $150 per kW for the next 13 kW of a system. With this rebate, homeowners installing a 6kW system on their roofs can save $4,500.

Tax Exemptions for Renewable Energy Equipment

Colorado has helpful tax breaks for homeowners going solar. With the Sales and Use Tax Exemption for Renewable Energy Equipment, you won’t have to pay any sales tax on the purchase of your system. The Property Tax Exemption for Residential Renewable Energy Equipment exempts homeowners from paying any additional taxes on the increased value of their house.

Colorado Community Solar

You might not have the money to afford a solar system, or maybe you don’t have enough roof space. Thanks to Colorado community solar, you can subscribe to an off-site solar array and experience the benefits of solar without installing panels on your roof.

Net Metering in Colorado

Like we said before, your solar panels will produce extra energy. Since Colorado has a net metering policy, you get credits for the excess electricity your system produces and allows you to use those credits when your system doesn’t generate enough power. Xcel Energy offers the top utility net metering program in Colorado.


You may qualify for the ITC If you purchase your solar system. The Solar Investment Tax Credit (ITC) is a federal tax credit for those purchasing solar energy systems for residential, commercial, or utility-scale properties. The credit reduces 26% of the cost of the equipment. To receive your credit, you must complete IRS Form 5695 when you file your taxes and add your renewable energy credit information to your typical form 1040.

Are Solar Panels Worth it in Colorado?

Just learning that Colorado has an average of 245 sunny days per year tells you the answer. Yes, going solar in Colorado is worth it. 

First off, Colorado has plenty of utility companies that offer generous rebates for solar purchases. Incentives are of great help when making the transition into solar so homeowners can bear the final cost. Don’t forget about the ITC, which will hold at 26% until 2022. Aside from the rebates and incentives, the panels’ payback period in Colorado is 8.2 years, and in 20 years, you’ll have saved $17,156 in power costs. So, in a sense, you’ll be able to pay the solar panel array with your solar savings!

Solar energy is also worth it from the Real Estate point of view in Colorado. Many homeowners claim that their home’s value increased once they installed solar panels. Overall, you can expect to potentially increase your home’s value by up to 4.1% more than comparable homes with no solar panels. Also, considering you have a payback period of 8.2 years, the return on investment is 8.5%, which turns out much more favorable than compared to other standard investments. 

Going solar isn’t an easy process. You have to contemplate a lot of factors before making a big decision. This article should help you understand the essentials of solar energy in Colorado and give you an overview of the concerns you have to tackle before purchasing a solar system here. Make sure you explore the solar market and find a company that suits your needs. 

Remember, you need to know what kind of solar transition you want to make. Do you want to install a small array to save some money on power, or do you want to go entirely off the grid? These answers will help you decide the size and, consequently, the cost you’ll have to bear in the future.

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