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FAQs: Colorado, Rebates & Tax Credits
Why is it good to have solar electric panels in Colorado?
Does My Power Company offer a Rebate?
What are the Xcel Energy rebates and REC payments?
What are my obligations to Xcel Energy if I get a rebate?
What if I move before 20 years?
What is net metering?
Does a PV system add to the value of my home?
What is the federal tax credit?
Do I have to declare the Xcel Energy rebates/incentives on my taxes?
Why is it good to have solar electric panels in Colorado?
Colorado, along with the rest of the southwest, is one of the best places in the country for photovoltaics. We typically get 300 sunny days per year here and have a relatively high altitude and low latitude. All these factors combine to make Colorado one of the sunniest places in the country.
Does My Power Company offer a Rebate?
Many do. We can give you information on your own state and power company. You can also research for yourself. One web site that works to describe every rebate program in the country is www.dsireusa.org.
What are the Xcel Energy rebates and Black Hills Energy rebates?
At the direction of the people of Colorado, Xcel Energy and Black Hills Energy offer two incentives to homeowners to put PV systems on their homes. The first is a straight rebate of $2.00/watt. This rebate is calculated by taking the power output of your PV system and multiplying it by $2.00. A REC is a Renewable Energy Credit. Renewable Energy Credits are generated by any green/renewable power source. They are often bought and sold on open markets. If a business or home buys RECs, it can effectively subsidize the production of renewable power, which offsets the energy they use. When you put your system PV system into service, Xcel Energy or Black Hills Energy will buy all the RECs that are scheduled to be generated by your system over 20 years. They put this into one up front REC payment of $1.50 per watt. Together the two incentives add up to $3.50 per watt.
What are my obligations to if I get a rebate?
To get the incentives you must sign a contract with them. This contract basically requires you to continue being an Xcel Energy or Black Hills Energy customer for the next 20 years and requires you to keep your PV system in working order for that period of time.
What if I move before 20 years?
Xcel Energy or Black Hills Energy requires that you assign your contract to the people who buy your house. In effect, they will take up where you left off and continue to enjoy the benefits of your system. This is a nice selling point for your home.
What is net metering?
Part of the law that requires the utility to provide the PV incentives also requires that the utility use net metering for new PV systems. This means that each installation only has one meter for metering both power used by the home/business and for power generated by the PV system. This means that the utility will effectively be paying the consumer the same rate for power that they generate as for the power that they use. With a large enough system, the consumer will see their electric meter turning backwards on sunny days and then turning forwards on cloudy days or at night. Every month, the customer only pays for what they used over and above what they generated. If the customer generates more power than they consume, then the utility will write them a check at the end of the year. If you are an Xcel Energy customer, you can tell them to just cary forward the excess production credits to the 20-year production contract, instead of recieving a year-end check.
Does a PV system add to the value of my home?
Absolutely. According to a federal government study, a PV system will add $10-$20 to the value of your home for every dollar saved over the course of a year. Thus, if your system saves you $700/year, it would typically add $7,000-$14,000 to the value of your home.
What is the federal tax credit?
There is a federal tax credit of 30% of the cost of the installed PV system. This is now, for 2009, 30% for residential systems, based on your after-rebate cost. It is 30% of total cost for commercial systems. At the end of the year when you install the PV system, you can remove that credit amount directly from your tax owed. So, if you owed, say, $9,000 in federal taxes and put a PV system on your house that costs $18,000 after rebate, then your tax credit would be $5,400 and your tax bill would be reduced to $3,600. You can even get out of the Alternative Minimum Tax with this credit. Consult your tax attorney or certified public accountant for details on how to do this.
Do I have to declare the rebates/incentives on my taxes?
The answer we have gotten on this question, for homeowners, is 'No', but we are not lawyers or tax accounts.