Why Are Colorado Office and Warehouse Owners Skipping Solar and Battery Projects? The Barriers Are Real and Fixable.
The technology works and the tax credits are real. What holds back Colorado's office and warehouse owners is rate design, financing structure and a lack of coordination, all of which have workable fixes.
By Keith Reynolds | Publisher & Editor, ChargedUp!
Key Takeaways
Colorado's commercial and industrial solar market lags residential, community and public-sector solar mainly because of demand-charge rate design, not because the technology is unready.
A single 15-minute spike in electricity use can set a commercial customer's demand charge for the entire month, which is why solar production timing matters more than annual output.
Every $1,000 of durable annual NOI improvement translates to roughly $12,000 to $22,500 in added property value, using cap rate ranges from CBRE's H2 2025 survey.
Commercial battery storage sized for backup power delivers different economics than storage sized for peak shaving; conflating the two stalls projects before they start.
Financing structure, not technology, is now the leading barrier to commercial solar adoption; C-PACE financing is one tool addressing that gap (See our companion feature: From Lender to Market Builder: Colorado C-PACE's New Mandate to Help Connect the Deals.)
A commercial building owner may look at solar, storage or a microgrid and see backup power, sustainability infrastructure or another capital project competing for scarce dollars. In Colorado's changing energy market, that view is too narrow. Rising utility costs, demand charges, interconnection delays, higher interest rates, tax-credit deadlines and tenant power needs are pushing energy strategy toward the center of commercial real estate finance. The question is no longer only whether solar lowers the electric bill. It is whether distributed energy protects net operating income, supports property value, reduces development delays and gives owners more control over an increasingly important operating risk.
A single 15-minute spike in electricity use can shape a commercial customer's power bill for an entire month. That interval helps explain why Colorado's commercial and industrial solar market has lagged behind residential solar, community solar and the public-sector market serving municipalities, universities, schools and hospitals.
The Demand Charge Problem
Jason Sharpe, CEO and co-owner of Namaste Solar, points to rate design and data transparency as the central barriers from the contractor's side of the market. Colorado's commercial and industrial segment has stayed among the softest parts of the state's solar industry, even as community solar, residential solar and the “MUSH” market, industry shorthand for municipalities, universities, schools and hospitals, have remained more active.
"A lot of it has to do with rate design," Sharpe said in a ChargedUp! interview. "A lot of commercial clients are on a peak demand charge and very low volumetric pricing."
That matters because commercial solar economics depend on more than annual kilowatt-hour production. They depend on when electricity is used, when power costs the most, when a building hits peak demand, and whether onsite solar and storage can reduce those peaks. In many commercial rate structures, the demand charge ties to the customer's highest short interval of demand during the billing period. Holy Cross Energy's rate documentation explains the mechanics: a customer can be charged for its monthly peak even if the spike lasts only 15 minutes. A chiller starts at the same time as kitchen equipment. EV chargers activate during a building peak. A warehouse, hospital or office hits its highest load for a few minutes, then carries that cost through the bill.
Solar can reduce grid purchases during production hours. Storage can discharge during peak demand windows. Smart building controls can stagger loads. The bottleneck is that many commercial customers still struggle to see the data, capture the value and finance a project that fits the building's lease structure, roof condition, tax position and ownership timeline.
Energy Costs Enter the Real Estate Conversation
Colorado's commercial solar debate is unfolding against a broader rate-pressure backdrop. The U.S. Energy Information Administration's most recent state benchmark data put Colorado's average commercial electricity price above the prior year, part of a national trend the agency tracks monthly in its state-by-state pricing tables. At the same time, Public Service Company of Colorado, doing business as Xcel Energy, sought recovery for electric-system investments made between 2023 and 2025. Xcel's original request of roughly $355.6 million was reduced to about $224.9 million under a settlement filed with the Colorado Public Utilities Commission in June 2026.
That does not mean every solar, storage or efficiency project will pencil. It does mean energy cost exposure is harder to treat as a fixed background expense, and harder to ignore in underwriting.
Why NOI Changes the Conversation
Energy savings matter because they flow through net operating income, a point often underplayed in commercial solar conversations. The basic income approach to valuation is straightforward: property value equals net operating income divided by the market capitalization rate. Using cap rate ranges reflected in CBRE's U.S. Cap Rate Survey for H2 2025, every $1,000 of durable NOI improvement translates mathematically into roughly $12,000 to $22,500 in added property value, depending on asset class, geography and risk. That is not a promise that every dollar of energy savings becomes balance-sheet equity. Buyers, lenders, tenants and appraisers still need to believe the savings are durable, transferable and reflected in the property's operating economics.
Rachel Mountain, co-owner and director of commercial sales at Namaste Solar, said the company already frames projects around that math. "We absolutely talk about increased NOI and property value," Mountain said, "as a result of reduced OpEx and Xcel's incentive program."
Backup Power Is Only One Use Case
Battery storage and microgrids are often discussed as backup power, especially as customers weigh outages, wildfire-related shutoffs and business continuity. But backup power answers only one question. Peak shaving answers another: how does a building reduce costly demand spikes? Load shifting asks whether a building can use or store power when it costs less. A microgrid asks whether a site can coordinate generation, storage, controls and critical loads.
Mountain said residential storage demand has grown in Xcel territory, particularly around wildfire-related shutoffs. Commercial storage has been slower. "On the commercial side, we haven't as a company seen any storage adoption at this point," she said. "I don't think that the financial case is quite there yet." Part of the reason: owners rarely start with a clear diagnosis. "Looking for backup power if there's an outage versus peak-shaving applications are very different deployments of the technology," Mountain said. "Most commercial building owners don't fully understand what they're asking for when they think they want storage." A battery sized for backup will not deliver the same economics as one designed to discharge during peak demand windows, and a battery that works in one utility territory may not create the same value in another.
The Data and Policy Gap
Sharpe said Xcel historically lacked smart meters granular enough to help commercial customers and solar contractors pinpoint the timing of peak demand. "If you're the buyer, you don't understand when you're using that," he said. "How do you know what to address with solar? It's hard to put a business case together." Xcel has been deploying smart meters as part of its advanced grid program, which the company says can provide commercial usage data in increments as small as 15 minutes. Sharpe sees three forces moving in the right direction: better information, better technology and better codes. "The technology is there, the information's there," he said. "It's just the policy that's the problem."
Colorado's utility landscape compounds the issue. Two investor-owned utilities, Black Hills Energy and Xcel Energy, are regulated by the Colorado Public Utilities Commission, while municipal utilities and rural electric cooperatives operate largely outside that structure. Sharpe pointed to Fort Collins, where battery charging and discharging ties more directly to time-of-use economics, as a contrast to Xcel territory, where he said commercial customers face restrictions on exporting power that solar did not generate onsite. Commercial buildings also do not receive the same battery incentive treatment as residential customers under Xcel's Renewable Battery Connect program, even though commercial load profiles often offer the clearest peak-reduction potential.
Commercial Solar Is Not Plug and Play
A residential solar sale can be standardized. A commercial project rarely can. Roof age, snow load, hail exposure, structural capacity and insurance requirements change the cost and feasibility of a rooftop system before a single panel goes up. Permitting and local review add another layer, since Colorado's local-control environment means project review varies by jurisdiction, especially once a project moves into structural upgrades or storage.
Interconnection adds a third layer. The national interconnection backlog grew sharply in recent years, with solar, wind and storage dominating the queue, according to Lawrence Berkeley National Laboratory. For commercial and industrial projects, the problem often surfaces at the distribution level, where utility technical review can depend on structural permitting and stamped engineering plans, creating sequential delays. A project that looks attractive on annual savings can lose momentum when utility review, structural permitting, financing and tenant approvals move on different timelines. Commercial solar has to be developed as a building strategy, not sold as an energy product.
Financing Adds Another Layer
Commercial projects often require a more complicated capital stack than residential systems. Some owners want to own the system and use the tax benefits directly. Others lack sufficient tax liability, prefer not to add debt to the balance sheet or need a third-party ownership structure. Under a solar power purchase agreement, a third-party developer owns, operates and maintains the system while the host customer buys the electricity at an agreed rate, according to the U.S. Environmental Protection Agency (EPA).
That complexity matters most in tenant-occupied buildings, where the owner controls the roof and capital plan while the tenant pays the utility bill. That split incentive stops projects even when the roof, solar resource and contractor are ready. Commercial Property Assessed Clean Energy financing, known as C-PACE, was designed to help close that gap by financing improvements through the property itself. Whether it has lived up to that promise in Colorado's commercial solar market is a question ChargedUp! examines in a companion piece, "From Lender to Market Builder: Colorado C-PACE's New Mandate to Help Connect the Deals."
The Tax-Credit Window
The federal tax-credit outlook has changed the commercial solar conversation. The Internal Revenue Service has issued guidance on the termination of clean electricity production and investment credits under Sections 45Y and 48E for wind and solar facilities placed in service after Dec. 31, 2027, unless beginning-of-construction requirements are met.
Mountain said Namaste Solar saw the change coming and safe-harbored a portfolio of roughly 40 tax-advantaged commercial solar projects in December 2025, ranging from about 100 kilowatts to one megawatt, with about $20 million in federal tax-credit value preserved. "This is not just talking about it in terms of a solar project," Mountain said. "This is a tax-advantaged investment opportunity that can be part of your overall energy management strategy." Because the offering is specific to Namaste Solar's portfolio, those details should be treated as the company's own program description unless independently verified through tax counsel.
David Henry, co-owner and senior director of commercial business development at Namaste Solar, said the bigger obstacle is bandwidth, not interest. "How many of these commercial folks are actually thinking about sustainability or their energy management program?" Henry said. "Right now, they're worried about, can I keep people in the buildings that I own, and do we think about building any more buildings?" That is not a failure of imagination. Vacancy, interest rates, refinancing pressure and construction costs have changed the calculus for nearly every owner, which is exactly why durable energy savings deserve a seat in the capital conversation rather than a separate one.
What to Watch
Several open questions will shape the next phase of Colorado's commercial solar market: whether smart meter data becomes accessible enough to model demand-charge savings with confidence; whether commercial storage programs start reflecting the grid value storage can provide; whether rate design begins rewarding peak reduction instead of relying on broad monthly demand charges; and whether safe-harbored, tax-advantaged projects reach qualified owners before the opportunity closes.
Colorado already has the technology, the data infrastructure and a functioning incentive landscape. The next step is aligning utilities, ratepayers, owners, tenants, regulators, CPAs and contractors around the same outcome: lower operating risk, more predictable energy costs, stronger NOI and buildings that improve the grid instead of merely stressing it. The commercial solar market unlocks when the business case becomes as clear as the technology.
Frequently Asked Questions
Why has commercial solar lagged behind residential solar in Colorado?
Commercial rate structures rely heavily on demand charges tied to a customer's highest 15-minute usage spike each month, rather than simple per-kilowatt-hour pricing. That makes commercial solar economics harder to model than residential solar, where volumetric billing dominates and the value of production is more straightforward to calculate.
What is a demand charge and why does it matter for solar economics?
A demand charge bills a commercial customer based on the single highest interval of electricity use during a billing period, often measured in 15-minute windows, regardless of how briefly that peak lasted. Solar and storage can lower a building's demand charge by reducing grid draw during those peak intervals, but only if the system is designed around the building's actual load profile.
How does solar affect a commercial property's net operating income and value?
Durable reductions in energy spending flow directly into net operating income, and property value equals NOI divided by the market capitalization rate. At cap rates reflected in CBRE's H2 2025 survey, every $1,000 of durable annual NOI improvement adds roughly $12,000 to $22,500 in property value, depending on asset class and market.
Is commercial battery storage worth it in Colorado?
It depends on the use case. Storage designed for backup power during outages has different sizing, duration and economics than storage designed to discharge during peak demand windows. Owners who start with a clear diagnosis of what problem they are solving, backup, peak shaving or both, get a more accurate financial case than owners who buy storage as a generic hedge.
Sources
Holy Cross Energy: Rates FAQ, demand charge mechanics
U.S. Energy Information Administration: Electric Power Monthly, Table 5.6.A
Xcel Energy: 2025 Colorado Electric Rate Review
Lawrence Berkeley National Laboratory: Grid Connection Backlog Grows, 2023 Data
U.S. Environmental Protection Agency: Solar Power Purchase Agreements
Internal Revenue Service: Internal Revenue Bulletin 2025-36
Companion feature: "From Lender to Market Builder: Colorado C-PACE's New Mandate to Help Connect the Deals," ChargedUp!
Interview Sources
Jason Sharpe, CEO and co-owner, Namaste Solar, interview with ChargedUp!, July 2026.
Rachel Mountain, co-owner and director of commercial sales, Namaste Solar, interview with ChargedUp!, Aug. 13, 2026.
David Henry, co-owner and senior director of commercial business development, Namaste Solar, interview with ChargedUp!, Aug. 13, 2026.
