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FAQs: Colorado, Rebates & Tax Credits

 

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.

What are the Xcel Energy rebates and REC payments?

At the direction of the people of Colorado, Xcel Energy offers 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 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 $2.50 per watt. Together the two incentives add up to $4.50 per watt.

What are my obligations to Xcel Energy if I get a rebate?

To get the Xcel Energy incentives you must sign a contract with them. This contract basically requires you to continue being an Xcel 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 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 Xcel Energy to provide the PV incentives also requires that Xcel Energy 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 Xcel Energy 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 Xcel Energy will write them a check at the end of the year.

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 capped at $2,000 for residential systems, but is unlimited 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 $5,000 in taxes and put a system on your house that cost $6,000 then your tax credit would be $2,000 and your tax bill would be reduced to $3,000. Consult your tax attorney or certified public accountant for details on how to do this.

Do I have to declare the Xcel Energy rebates/incentives on my taxes?

The answer we have gotten on this question is 'No', but we are not lawyers or tax accounts. Please consult your tax attorney or accountant. You can also read more on this on the COSEIA web site. (www.coseia.org)

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