Colorado Governor John Hickenlooper signed a bill into law on Friday that will significantly reduce the cost of solar by controlling permitting fees.

Gov. Hickenlooper signed House Bill 1199 into law. The bill requires that all state and local permitting fees for residential and small business solar installations cost the consumer only what they cost the government to administer, not to exceed a total of $500 for residential or $1,000 for small business installations.

“This is a significant step forward for the solar industry,” said Neal Lurie, executive director of the Colorado Solar Energy Industry Association. “It means solar costs are coming down in Colorado.”

Permitting fees, in many cases, can account for a third of the installation costs for solar arrays, according to national survey conducted earlier this year by SunRun. On average in the U.S., permits for a residential solar installation add about $2,516 and up to $100,000 for large-scale arrays.

“This also means Colorado is once again leading the nation in terms of driving policy that can stimulate the clean energy economy,” Lurie said.

Capping fees eliminates one more obstacle in the way of residents choosing to install solar and one more obstacle in the way of a solar vender making a sale and employing people.

The bill passed in the house in early May with tremendous bipartisan support and a 33 to 2 vote in favor.

The law replaces an older one, Senate bill 117, which was only scheduled to last three years. HB 1199 will stay in place for seven years.

There were flaws in the first bill, Lurie said.

“There were a lot of efforts to skirt the intent of the bill,” Lurie said.

The senate bill had the same caps on fees of $500 for residential systems and $1,000 for small business installations. But it only referenced local permitting fees and didn’t address state fees, Lurie said.

And community governments started creating new permitting fees that weren’t called solar permitting fees in order to get around the legislation, Lurie said.

The new law should make an immediate impact on the cost of small solar arrays, he said.

Colorado is leading the charge to change the way permitting fees affect solar. Vermont also recently passed a law to eliminate solar permits altogether and allow people to register solar installations with the same ease they would register a car.