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In December 2005 the Colorado Public Utilities Commission (PUC) adopted standards for net metering and interconnection, as required by Amendment 37, a renewable energy ballot initiative approved by Colorado voters in November 2004. The interconnection rules were overhauled in July 2021.

The PUC standards generally apply to investor-owned utilities (IOUs) with 40,000 or more customers and all electric cooperatives. Municipal utilities with 5,000 customers or more are required to adopt interconnection rules that are functionally similar to the PUC's standards (see H.B. 08-1160). Electric cooperatives and municipal utilities may reduce or waive any insurance requirements that apply to IOUs.

Colorado’s interconnection rules are based on the Federal Energy Regulatory Commission’s (FERC) interconnection standards for small generators, adopted in May 2005 by FERC Order 2006. Colorado's rules for interconnection include requirements, standards, and review procedures for three levels of interconnection for systems up to 10 megawatts (MW), based on system complexity.

Level 1 Interconnection

Level 1 interconnection applies to inverter-based systems with a maximum nameplate capacity of 25 kilowatts-AC; these systems can be paired with energy storage systems no larger than 25 kW-AC. These systems must comply with the IEEE 1547 and UL 1741 standards and other applicable standards.

Level 2 Interconnection

Level 2 interconnection is the fast track process, and eligible systems depend on the line voltage, system size, and system location in relation to the utility line:

Line Voltage	Eligibility Regardless of Location	Eligibility Meeting Location Requirements
< 5 kV	≤ 500 kW	≤ 500 kW
≥ 5 kV and 15 kV	≤ 2 MW	≤ 3 MW
≥ 15 kV and 30 kV	≤ 3 MW	≤ 4 MW
≥ 30 kV and < 69 kV	≤ 4 MW	≤ 5 MW

To meet the location requirements, inverter-based systems must be within 2.5 electrical circuit miles of a substation and on a mainline. All synchronous and induction facilities have a maximum size of 2 MW, regardless of location, for Level 2 eligibility.

These systems must comply with the IEEE 1547 and UL 1741 standards and must be connected to a portion of the distribution system that is subject to the utility's tariff. There are specific limitations on a single system's potential impact and the aggregate potential impact on the grid. If a proposed interconnection fails one of the various screening tests, the customer-generator may need to pay for a supplemental review by the utility.

Level 3 Interconnection

Level 3 interconnection applies to systems up to 10 MW that do not qualify for either Level 1 or Level 2 interconnection procedures. Level 3 interconnection may require studies involving project scope, feasibility, system impact, and facilities. The customer may need to make a deposit and incur a portion of the total costs associated with these studies. Insurance levels will be determined on a case-by-case basis by the servicing utility.

Liability Insurance

A utility can only require an applicant to purchase insurance covering utility damages in the following amounts for each occurrence:

• $3 million per occurrence for non-inverter-based systems over 5 MW
• $2 million per occurrence for inverter-based systems over 5 MW and non-inverter-based systems between 2-5 MW
• $1 million per occurrence for inverter-based systems between 1-5 MW and non-inverter-based systems between 500 kW-2 MW
• $500,000 per occurrence for non-inverter-based systems between 50-500 kW
• No insurance is required for inverter-based systems under 1 MW and non-inverter-based systems under 50 kW