Colorado Solar Incentive Programs

8 yr
Avg. payback
$1,400/yr
Avg. annual savings
None
State tax credit
retail
Net metering rate
Federal tax credit update: The 30% residential solar tax credit (Section 25D) ended for systems whose installation was completed after December 31, 2025, under Public Law 119-21. Systems whose installation was completed in 2025 can still claim it on a 2025 return. New 2026 installations do not qualify for homeowners who buy. What changed

Colorado Savings Estimator

Estimate your annual savings factoring net metering, tax exemptions, and Xcel's performance incentive.

… Annual Net Metering Value
… Xcel Solar*Rewards (yr 1)
… Sales + Property Tax Savings
Active Programs

Colorado Solar Programs, 2026

Net Metering, 100% Full Retail Credit
4 CCR 723-3 §3664 · Xcel, Black Hills, and co-ops under CO jurisdiction
Active +

Colorado's net metering rule (4 CCR 723-3 §3664) requires investor-owned utilities and cooperatives under state jurisdiction to credit residential solar customers at the full retail electricity rate for all excess generation exported to the grid. This means every kilowatt-hour your panels produce beyond immediate home use is worth the same as a kilowatt-hour you would otherwise buy from the utility.

  • Credit rate: Full retail rate, currently approximately 12 to 15¢/kWh depending on utility and rate class
  • Monthly banking: Excess credits roll forward month-to-month, allowing summer production to offset winter bills
  • Annual true-up: Utilities may pay out any remaining annual credit balance; terms vary by utility, confirm at interconnection
  • System size: Xcel customers may size systems to produce up to 120% of their prior 12 months of usage; co-ops set their own limits, so confirm with your utility
  • Applicable utilities: Xcel Energy (Public Service Company of Colorado), Black Hills Energy, and rural electric cooperatives regulated by the Colorado PUC
Utility coverage: Xcel Energy serves the Denver metro, Boulder, Fort Collins, Colorado Springs, and the Front Range. Black Hills Energy covers Pueblo, Canon City, and southeastern Colorado. Many rural areas are served by electric cooperatives, contact your co-op directly to confirm their net metering terms, as rules can differ slightly.
Sales Tax Exemption, 100% on Solar Equipment
CRS §39-26-724 · State sales tax eliminated on all solar hardware
Statewide +

Colorado Revised Statutes §39-26-724 provides a 100% state sales tax exemption on the purchase of solar photovoltaic equipment and components. This is one of the most straightforward and valuable upfront incentives available to Colorado solar buyers, it eliminates the state's 2.9% sales tax on all covered equipment at the point of sale.

  • Covered equipment: Solar panels, inverters, racking systems, wiring, and other components directly used in solar energy generation
  • State sales tax: 2.9% rate fully eliminated on qualifying purchases
  • Local/county taxes: The exemption applies to state sales tax; local and county taxes may still apply depending on jurisdiction (typically 0 to 5% additional). The installer should handle proper tax treatment, confirm with your contractor
  • Automatic at point of sale: No application required for buyers; the contractor applies the exemption when purchasing equipment from suppliers
Dollar impact example: A $20,000 equipment cost saves approximately $580 in Colorado state sales tax (2.9%). Combined with local tax where exempted, total savings can reach $1,000 to $1,500 depending on jurisdiction. This is a direct, upfront reduction in system cost.
Property Tax Exemption, 100% for Residential Solar
CRS §39-3-118.5 · Added home value from solar excluded from assessment
Statewide +

Colorado Revised Statutes §39-3-118.5 exempts residential solar energy systems from property tax assessment. When a county assessor values your home, any added value attributable to the solar installation is completely excluded from the taxable assessed value of the property. Installing solar does not raise your property tax bill.

  • Scope: Full exemption on the added assessed value for all residential solar installations, statewide
  • Automatic: The exemption applies by statute, no annual application is required in most counties, though notifying your assessor at installation is good practice
  • Duration: The exemption applies for the life of the system on that property
  • No system size cap: Homeowner-owned residential systems have no published kW cap; third-party-owned residential systems qualify only up to 100 kW AC
Dollar impact example: A 10 kW system may add $25,000 to $30,000 in home appraised value. At Colorado's residential assessment rate (~6.95% of actual value) and a local mill levy of ~80 mills, without the exemption that would add ~$140 to $165 per year in property taxes. The exemption eliminates that cost for the system's life, approximately $3,500 to $4,100 over 25 years.
Xcel Solar*Rewards
$0.02/kWh performance incentive · Systems up to 25 kW · Funded annually
Apply Through Xcel +

Xcel Energy's Solar*Rewards program is a performance-based incentive (PBI) that pays Xcel residential solar customers for every kilowatt-hour their systems generate, in addition to net metering credits. The incentive runs for a multi-year term and is paid based on actual metered production.

  • Incentive rate: $0.02 per kWh (2 cents per kWh) of solar generation
  • System size: Available for residential systems up to 25 kW DC
  • Annual example: An 8 kW system producing 10,400 kWh/year earns approximately $208/year in Solar*Rewards incentive payments, on top of net metering credits
  • Funding: Xcel's Solar*Rewards budget is approved annually by the Colorado PUC, program availability depends on remaining annual funding. Apply early in each calendar year
  • Incentive term: Xcel's REC purchase contract has historically run 20 years for small customer-owned systems; confirm current terms with Xcel
  • How to apply: Submit your Solar*Rewards application through Xcel Energy's online portal during the interconnection process; your installer typically coordinates this
Important: Solar*Rewards is a separate payment from your net metering credit. You receive both: net metering credit (at retail rate) for net exported energy AND the Solar*Rewards payment (per kWh generated). The program is available only to Xcel Energy (Public Service Company of Colorado) customers, Black Hills Energy and co-op customers should contact their utility for comparable programs.
Colorado Energy Office Programs
Weatherization & efficiency programs that complement solar investments
Supplemental +

The Colorado Energy Office (CEO) administers weatherization and energy efficiency programs that work alongside solar installations to maximize home energy performance and financial returns. Improving efficiency before or alongside going solar reduces the system size needed and increases overall savings.

  • Weatherization Assistance Program (WAP): Free weatherization services for income-qualifying homeowners, including insulation, air sealing, and HVAC improvements
  • Home Energy Efficiency Incentive: Rebates and technical assistance for efficiency upgrades including insulation, smart thermostats, and heat pumps
  • ENERGIZE Colorado Gap Fund: Low-interest financing for efficiency and renewable energy projects, primarily for small businesses and nonprofits but with some residential components
  • Complementary logic: Reducing a home's energy demand through weatherization before sizing a solar system means a smaller, cheaper system can meet 100% of needs
Income eligibility: Many CEO programs prioritize households at or below 80% of Area Median Income (AMI). Income limits vary by county and program year. Visit energyoffice.colorado.gov or call 303-894-2383 to check current availability and eligibility.
State Income Tax Credit
Colorado does not offer a state income tax credit for residential solar
Not Available +

Colorado does not currently offer a state income tax credit for residential solar installations. The state's solar incentive strategy relies on net metering (at retail rate), the sales tax exemption, the property tax exemption, and Xcel's Solar*Rewards program, rather than a state income tax credit.

  • No state tax credit is available for 2026 residential solar installations
  • No pending legislation as of September 2026 to create a new state solar tax credit
  • The combination of the other Colorado programs remains highly competitive nationally
Context: Even without a state tax credit, Colorado's full-retail net metering, complete sales and property tax exemptions, and Xcel's Solar*Rewards program together deliver substantial value. The absence of the federal ITC (expired Dec 2025) makes Colorado's remaining stack more important to understand fully.
Federal Solar Investment Tax Credit (ITC)
Expired December 31, 2025 · Not available for new 2026 installations
Expired +

The federal 30% Investment Tax Credit (ITC) for residential solar installations expired on December 31, 2025. No federal income tax credit is available for residential solar systems whose installation is completed on or after January 1, 2026.

  • Systems whose installation was completed in 2025 or earlier that have not yet filed their return may still be eligible, consult a tax professional
  • Commercial solar may have different provisions under separate IRS rules, verify with a tax advisor
  • No successor federal residential solar credit has been enacted as of September 2026
Note: Colorado's net metering, tax exemptions, and Xcel's Solar*Rewards remain active and fully compensate for much of the federal incentive stack. A 10 kW system in Colorado still has a compelling economics case in 2026 through state-level programs alone.
Last verified: September 2026. Colorado PUC rules and Xcel Energy program funding are subject to change annually. Confirm Solar*Rewards availability, current rates, and interconnection timelines with Xcel or your installer before system installation.

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Incentives and rates change often and depend on your utility, location and tax situation. Confirm the details that apply to you with your utility and a licensed tax professional before you sign a contract.