When someone mentions “Sunshine State,” most people think of Florida. But that nickname applies equally as well to Colorado. With plenty of sunshine per year, many areas of the state are perfect candidates for homeowners looking to go green with solar power. Federal income tax credits and local incentives reduce the cost of implementing a solar panel energy system.
Benefits of Solar Power
If you are just starting to consider solar power as a viable option for your home, you may not be familiar with all the benefits it provides. Some of its attractive features include the following:
- Renewable energy source with reduced carbon emissions
- Tax credits
- Reduced utility bills
- Improved home equity
- May earn money back from utility company
- Low maintenance
- Durable – may last 40+ years
- Outstanding warranties
- Works in any temperature
Sounds pretty good, doesn’t it? Keep reading to learn more about Colorado solar power and associated tax credits.
Solar Investment Tax Credit
The Residential Clean Energy Credit, commonly known as the Solar Investment Tax Credit (ITC), is a federal program started in 2006 that incentivizes taxpayers to use solar energy. Anyone who purchases and installs a solar power generation system in their home or business between 2022 and 2032 can claim a 30% income tax credit on the total cost of the system, including installation. This means if your solar package costs $20,00, you can deduct $6,000 from your IRS payment for the year in which the system’s installed.
The Inflation Reduction Act of 2022 extends the credit through 2034 but with lower percentages. In 2033, the credit drops to 26% and to 22% in 2034.
There are a few requirements you must meet to qualify for the tax credit. These include the following:
- Property located in the U.S.
- Solar panels installed between 2006 and 2034
- Rental properties excluded unless you live in them part of the year
- Taxpayer owns the system
- Cost of personal items using generated power not included in the credit
Claiming the Solar Tax Credit
Claiming the credit is easy. When you file your tax return for the year in which the system’s installed, include IRS Form 5695 with your return. You will also need to include a copy of the following documents:
- Net Metering Agreement
- Impact Energy’s solar license number
Colorado Solar Incentives
Colorado promotes the use of solar power and encourages homeowners to adopt the technology. From managing federal assistance programs to providing sales and property tax exemptions, Colorado is at the forefront of the clean energy movement.
Weatherization Assistance Program
The Weatherization Assistance Program (WAP) is a federal assistance program to help low-income families improve the energy efficiency of their homes. Most families will not be charged for solar panel installation on the roof. The state estimates that going solar will save each resident an average of $400 on their yearly utility bill. In addition to that savings, the Colorado WAP pays for all the system’s maintenance and repair costs for 20 years from the date of installation.
Sales Tax Exemption
While the federal tax credit reduces your income tax, it doesn’t affect the cost of the system. However, Colorado’s sales tax exemption reduces the purchase cost by eliminating the 2.9% sales tax on solar panels and all supporting structures and components.
Solar Rewards from Xcel
During the daytime, your solar panels will usually generate more power than you use. A meter registers this surplus number as it flows into the grid and “banks” it as a credit with the Xcel utility company. At night, you may have to draw from your banked power in Xcel’s electrical grid, which debits your stored solar credits. Excess credits roll over to the next month’s bill.
At the end of the year, through the Solar Rewards program, Xcel purchases any excess energy your system generates, so you may receive a substantial check from your utility company.
Property Tax Exemption
A survey by Zillow reported that solar panels increase home value by an average of 4.1%. For property tax purposes, a county appraiser will calculate the added value by comparing the sales of comparable homes with and without solar panels. The derived value of solar panels will be reflected in the property’s appraisal value, but the additional value is exempt from property tax.
How do the experts at Impact Energy convert solar power to electricity? We install solar panels on your roof or on the ground that absorb the solar energy. An inverter converts the stored Direct Current (DC) power to the Alternating Current (AC) used by your appliances.
Here at Impact Energy, we also offer Tesla backup solar batteries for new installations that store surplus energy generated by the solar panels. This technology allows you to try the going-off-the-grid experience. The batteries can also function as a whole-home power source if the grid goes down.
Preliminary Steps for Sizing the System
Installing a solar panel system on your roof is not a DIY project and is one that’s best left to the professionals. Although the experts at Impact Energy will calculate the appropriate size for your roof and electrical needs, here’s a basic overview of the issues we encounter where you can help.
It’s helpful if we know your average daily kilowatt-hours (kWh) usage. If you can, collect the data from the last 12 monthly bills. Add the kWh and divide by 12 to get an average monthly use that accounts for rainy and snowy days. Divide the monthly average by 30 to obtain a daily average. Have that number handy when one of our technicians arrives to give you a cost estimate.
We’ll mount panels so that they face south and are in the sun most of the day. If your roof is shaded, we may choose to install the panels in a sunny spot in the yard. Alternatively, you might cut back trees to allow more sunlight to reach the roof.
Most U.S. homes use an average of 867 kWh per month. Without getting too complicated, you could expect to need 20 to 25 solar panels for the average American home. Larger residences and properties with higher power consumption rates will require more.
Expected Life Span and Warranties
All of our solar panels are made in the U.S. with durable tempered glass that is a highly energy-efficient material. These panels have an expected life span of 25 to 40+ years and require little maintenance. They resist hail, and their black color absorbs heat, so there’s no need to shovel snow off of them.
If a problem does occur, the products come with a 20-to-30-year warranty for defects caused during the manufacturing process. The company also warrants a stated level of productivity for this same timeframe. Impact Energy has a 10-year warranty to cover issues related to installation and labor costs to repair or replace warranted parts.
Right now is a great time to consider the advantages of solar power for your home or business. It’s never too late to start saving money on utility bills or even earning money from your banked energy credits.
The specialists at Impact Energy put people first. We provide world-class customer service and use the finest, most durable products available. We don’t cut corners, and we stand behind our craftsmanship with a 10-year warranty on our work.
Why wait any longer? We are here, ready to help you join the solar revolution. Contact Impact Energy Colorado Solar installation today for a free estimate or to request more information.