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Solar Panels and Energy Production: How the 200% Rule Provides More Flexibility for Homeowners Going Solar

Blog Updated: May 2024

It’s important to know the different elements that you should consider when going solar. So, in this blog, we break down the 200% rule and explain how you can determine what size solar system is best for you and your home.

Background info: the 120% rule

Historically, the 120% rule limited the size of the solar system you could install on your home to 120% of your last 12 months kilowatt hour usage. This limit was approved by the P.U.C (Public Utilities Commission) and was set with the intention that a homeowner only install enough solar on their home to cover their personal consumption, plus a little extra for electricity use growth over time.

What’s happening now: the 200% rule

In 2021, Colorado passed a bill, SB21-261, that changed the 120% rule to 200% so that homeowners can now offset up to 200% of their last 12 months of energy usage. The 200% rule will allow for more flexibility for the size of solar systems and will help homeowners future proof their homes by considering future energy usage and changes. Because the cost for natural gas is going up and more people are moving towards home electrification and electric vehicles, the extra 80% capacity will help enable these moves towards a greener future.

But 200% isn’t right for everyone

While this new rule is exciting because it allows for more opportunity and flexibility, that doesn’t mean sizing to 200% is right for everyone. First, not all utilities have adopted this rule. Currently, Fort Collins Utilities, CORE, Loveland Utility, and Xcel allow 200%. For the other utility providers in our service area, they either offer systems with 120% capacity or have other specific system size limitations. 

If you're serviced by a utility that allows 200%, sizing your system appropriately still depends on several variables including: available roof area, tree and obstruction shading, your current electricity usage and how your electricity consumption will change over time. Some considerations which would drive going over 100% of your current consumption are adding an electric vehicle and switching natural gas appliances to electric (like installing an electric heat pump, hybrid electric hot water heater or induction cooktop). In those cases, the 200% rule allows you to install more solar now and then increase your consumption in the future as you make those home upgrades.

Just oversizing the solar system to “go big” is not a good long-term investment as those excess kilowatt hours you generate will either roll forward and accumulate in your account or get paid out at the end of each year at a low wholesale rate. You can only choose one option so if you build up a large credit of kilowatt hours on your account, they can’t be converted and paid out later. The credits can’t be transferred to a new homeowner or transferred from one home to the next either.

At Namaste Solar, we are looking to maximize the return on investment (ROI) for each and every system we design, and most often, that means sizing a system to right around 100% of current usage. If you aren’t planning to dramatically increase your energy usage in the future, oversizing your system is not the best choice for your home.

Long story short

Our non-commissioned solar experts can look at your previous energy usage along with the considerations mentioned earlier to determine how big your system needs to be to fit the needs of your home, and we will design a system to maximize the economic returns for your household. Solar systems can last up to 30 years so it’s important to plan for your future! Our advisers are happy to talk it through with you and make sure your roof is set up to give you the brightest future for your home.

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