May 26, 2024

How Buildings in Denver Can Reduce their Energy Costs

5 min read

Denver has a climate that covers a wide range of temperatures during the year. The hottest summer days have temperatures above 90°F, and all other seasons have days with freezing temperatures. As a result, local buildings need both space heating and air conditioning, and space heating is the largest of the two loads. To keep energy bills at a reasonable level, these systems must be designed to operate efficiently.

In spite of the cold weather experienced for several months, Denver gets plenty of sunshine throughout the year. Homes and businesses can deploy solar panels to take advantage of this, and reduce their electricity bills. There are also solar incentives from Xcel Energy, the utility company that serves most of Denver.

HVAC upgrades and solar power can be combined with LED lighting to further improve the energy efficiency of a building. Heating and cooling systems consume much more energy than lighting fixtures, but an LED upgrade normally offers a quick payback period. In addition, LED lamps last much longer than their less efficient counterparts.

In fact, Seth Leitman of Green Living Guy says, “I believe the single biggest tips if you have a home is to do air sealing, LED lighting and insulation to start. You want to do solar and energy storage later. The barrier for this green living expansion is continued reinforcement of this simple education.”

Heating and Cooling Buildings More Efficiently

There are three main ways to reduce heating and cooling expenses in buildings. When deployed together, these measures can achieve the lowest possible energy consumption:

  1. Making sure the building is well insulated and free of air leaks. This reduces the workload on space heaters and air conditioners. A building with an efficient thermal envelope can keep heat inside more easily during summer, while reducing heat gain during summer. In other words, an efficient building envelope saves energy all year long.
  2. Upgrading to heating and air conditioning units with higher efficiency. When HVAC equipment has a higher efficiency, it can meet the same heating and cooling loads needs with less energy consumption. For example, when replacing a window-type air conditioner with a modern mini-split unit, savings above 60% are common.
  3. Optimizing heating and cooling with smart controls. Energy expenses can be reduced further when HVAC systems have automatic controls instead of manual temperature settings. Small heating and cooling systems can normally be controlled with a smart thermostat, and larger installations can use a BAS, or Building Automation System.

Energy consultants will normally recommend a building envelope inspection as the first step. Even if heating and cooling systems are upgraded to the latest technologies, there will still be energy waste if the building is not airtight or poorly insulated. If building envelope issues are addressed first, heating and cooling upgrades achieve greater savings. A thermal imaging camera is a very powerful tool when inspecting a building envelope, since air leaks and insulation gaps become visible.

Denver has electricity prices below the US average, and this provides a good opportunity to deploy heat pump systems. In simple terms, a heat pump can be described as a reversible air conditioner: it provides cooling during summer and heating during winter.

Variable refrigerant flow (VRF) systems use heat pumps and automatic controls to deliver efficient heating and cooling all year long. Heat pumps also run 100% with electricity, requiring no fuel combustion like furnaces and boilers. This reduces the local emissions produced by buildings, helping control urban pollution.

Using Solar Power in Denver

Denver gets abundant sunshine, even when there are many cold days during the year. In fact, low temperatures are favorable for solar power systems: cold weather helps remove heat from solar panels, and they operate more efficiently. Colorado in general is a sunny state, making photovoltaic systems very productive.

Solar power systems also get tax benefits when installed in Denver. There is a statewide sales tax exemption for solar technology, which makes the project more affordable. In addition, there is a property tax exemption for any increase in property value that is due to solar panels. In other words, your home becomes more valuable with a solar power system, but property taxes are not increased.

To complement the Colorado tax exemptions, there is a nationwide tax credit for going solar. When homeowners or businesses purchase a solar power system, they can claim 30% of their investment from the federal tax burden.

  • If you pay $15,000 for a 5-kilowatt solar panel system, you can deduct $4,500 from your next tax declaration.
  • Note that tax benefits apply even if you purchase the solar power system with loaned money.
  • However, you miss the tax incentives if you lease solar panels, since legally they belong to the solar lease provider.

Consider that the 30% federal tax credit will only be available until the end of 2019. The benefit will be reduced to 26% and 22% in 2020 and 2021. Starting from 2022, there will only be a 10% benefit for solar power systems used in businesses, and there will no longer be a tax incentive for homeowners.

Colorado has a favorable net metering law for solar power: any surplus electricity from your can be sent to the power grid, and you get credit for it. This means you can compensate for any electricity consumed at night with surplus solar energy during the day. If the total production from your solar panels exceeds your consumption, you can claim the credit in cash or you can carry it over to the next month.

Xcel Energy offers a performance bonus through the Solar*Rewards program. This represents extra cash beyond your normal power bill savings:

  • Solar power systems with up to 25 kilowatts of capacity get a bonus of 0.5 cents per kilowatt-hour produced. For example, if your solar panels deliver 10,000 kWh in a year, you get a bonus payment of $50.
  • The incentive is much better for systems larger than 25 kW, up to 500 kW. In this case the bonus increases to 3.75 cents/kWh. This means you get $375 for every 10,000 kWh produced.
  • Solar power systems larger than 500 kW must follow a bidding process to get the incentive. However, only large businesses deal with systems of this scale.

Xcel Energy applies higher electricity prices during summer, since the power grid is burdened by air conditioning systems. However, this is good news if you use solar panels: their energy output becomes more valuable during summer, precisely when they are more productive!


Buildings in Denver can reduce their energy expenses with a combination of energy efficiency measures and solar power. In particular, energy efficiency measures for building heating systems have the highest potential to save energy. Air conditioning upgrades and LED lighting can reduce power bills, especially when combined with a solar power system.

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