How Net Metering Works in Colorado
January 26, 2024
When most think about solar, the sunny southern states come to mind as prime producers. Believe it or not, Colorado gives states like Florida and California a run for their sun, topping both states with over 300 sunny days a year. Not only that, but the state’s famously cool snowy winters are conducive to more efficient solar energy output, with up to 20% more electricity in cold weather than in hot weather.
While the weather is great, the utility rates in Colorado are on the rise, with Xcel Energy announcing rate hikes in September of 20231. On the upside, Colorado has progressive solar laws and attractive solar financing options that encourage the adoption of solar power. Local Colorado solar incentives like the Holy Cross Energy and Energy Smart Colorado Rebates also make it a very accessible energy solution for homeowners.
The state’s net metering program also offers a great incentive for homeowners to install solar today and not only gain energy independence but also the ability to sell excess energy generation back to the grid. Net metering is an effective strategy to minimize your energy expenses, optimize your solar savings in the long run, and expedite the payback period of your solar panels. Here is what you need to know about net metering in Colorado.
What is Net Metering?
The energy generation of your solar panels hinges on the amount of available sunlight. Surprisingly, this well-known snowy paradise boasts a tremendous amount of sunny days per year, and contrary to popular belief, average solar panel output by hour can actually outperform the summer months in cold climates because solar cells are more efficient at lower temperatures!
Solar photovoltaic (PV) systems usually hit their peak production around midday, often producing more than the home is consuming, which leaves a surplus of solar power. Through a system known as net metering, this surplus solar power can be fed back into the local electrical grid to be sent to other homes, earning you credits that offset your utility bill.
Essentially, the net metering process looks like this:
- The electricity company measures your surplus solar generation using a revenue grade meter that supports bidirectional monitoring.
- Credits from surplus solar energy are subtracted from your monthly electricity bill.
- For months where solar generation is higher than your consumption, the difference is rolled over to the following month.
Net Metering in Colorado
Thankfully, Colorado is a mandated net metering state, although the exact policy can differ among utility companies. The Centennial State has a universal net metering policy that applies to all electric utilities, excluding municipal utilities serving fewer than 5,000 customers.
Who is eligible? All residential solar systems with a capacity of up to 10 kW are eligible for net metering. This scheme permits homeowners to export surplus energy back to the power grid and receive billing credits in return. Notably, these credits are equivalent to the retail cost of electricity in the state of Colorado, and there are also no energy caps – a perk to the state’s net metering program.
Xcel Energy and Black Hills Energy2 are the two largest electricity utility providers in Colorado, and both offer net metering. There are also 29 municipal utilities and 22 rural electric cooperatives – although they are not required to offer net metering.
It’s always advisable to consult with your service provider before committing to any agreement, and keep in mind that you have the option to incorporate solar battery storage to help offset energy costs if your net metering program doesn’t offer optimal benefits.
Will Installing Solar Panels in Colorado Save You Money?
Switching to renewable energy that is powered by nature’s free resources will always be lighter on your pocket. Assuming an average 6kW solar system that produces around 9,600 kilowatt-hours (kWh) of energy per year and Colorado’s current electricity rate of 15 cents, according to Energy Sage, the average homeowner can save up to $1,440 on annual energy bills!
The average amount saved will depend on various factors, including:
- Your current electricity bill
- The size of your solar system
- The amount of sunlight your home receives
- The cost of electricity in your area
How to Get the Benefits of Solar in Colorado
Partnering with one of Colorado’s electricity companies for Net Energy Metering (NEM) is relatively straightforward. These are the requirements to join the program, according to Xcel Energy.
Pre-approval From the Electricity Utility
Xcel Energy highly recommends that construction of your system SHOULD NOT commence until your application receives full approval from the electric utility provider engineering team and all final agreements are fully signed and in place before installing your net meter.
Submit an Interconnection Application
In most cases in Colorado, the developer or installer will submit the interconnection application on your behalf and manage the details of your project directly with the electricity utility. The homeowner can also manage this part of the process independently.
Your system must have a visible disconnect switch or a UL 1741 solar inverter that is capable of disconnecting from the grid during a power outage.
In Colorado, you must have a bidirectional power meter installed by the local electricity utility. Also known as a two-way meter, this device records the amount of electricity consumed and the amount of electricity generated by your home or business.
Proof of Insurance
You must provide general liability insurance for any generation system greater than one megawatt (uncommon in residential applications).
Let Freedom Solar Power Guide Your Net Metering Journey
The time is now to stop renting electricity from the utility! Be most powerful with Freedom Solar Power. Contact us today to start your Colorado solar energy journey!