With multiple solar incentives available, homeowners in Colorado can save on the cost of installing a solar panel system. Coupled with the state’s high sunshine levels, claiming incentives can make solar panels a worthwhile investment for Coloradans. Keep reading to learn about available incentives in the state, how much you can save on installation, and how to apply.
Key Takeaways
- Colorado ranks twelfth in the nation for installed solar capacity, with enough solar installed to power over 850,000 homes, according to the Solar Energy Industries Association (SEIA).
- Colorado residents, along with all residential solar customers in the U.S., can claim the federal solar tax credit, which is worth 30% of total system costs.
- The average cost of going solar can range from $2.50–$3.33 in Colorado, based on responses to our 2025 survey of 1,000 solar customers nationwide.
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What Solar Incentives Does Colorado Offer?
Colorado offers numerous solar incentives, including tax exemptions, loan programs, and local rebates. The table below shows available incentives, eligibility criteria, and potential savings in the state.
| Incentive | Who’s Eligible? | Description | Potential Savings |
|---|---|---|---|
| Investment Tax Credit (ITC) | U.S. residents | Offers a federal tax credit worth 30% of your total system cost | 30% of your total system cost |
| Sales tax exemption | Colorado residents | Exempts solar equipment from the state’s sales tax | 2.9% of your total system cost |
| Property tax exemption | Colorado residents | Exempts the value of a solar system when assessing a home’s property tax value | Varies based on the home, system size, and local tax numbers |
| Solarize Summit | Residents of Breckenridge, Frisco, Silverthorne, and unincorporated Summit County | Offers a direct, one-time rebate | $1,650 |
| Colorado Residential Energy Upgrade (RENU) Loan | Colorado residents | Offers $0 down, low-interest rate loans | No direct savings |
| City of Boulder Solar Grants | Boulder residents | Income-qualified residents can claim a one-time rebate | $1 per watt (up to $8,000) |
Here’s some more information on each of the above incentives, and we’ll cover the federal solar tax credit in more detail below.
- Solar sales and use tax exemption: When you purchase a solar power system in Colorado, you are exempt from paying the state’s 2.9% sales tax. For example, if you install a system priced at $15,000, you could save about $435 in taxes with the exemption.
- Solar property tax exemption: The value of a home typically goes up when you install a solar panel system. However, Colorado excludes your solar energy system when calculating your home value for property tax assessment purposes. These savings in property taxes apply every year.
- Solarize Summit: The High Country Conservation Center offers residents of Breckenridge, Frisco, Silverthorne, and unincorporated Summit County a one-time rebate of $1,650. Homeowners also get an additional 5% discount on the cost of solar panels if they use one of the program’s official installers.
- Colorado RENU Loan: The Colorado Clean Energy Fund offers residents solar financing in partnership with the state’s credit unions. Colorado homeowners can borrow up to $75,000 for a solar installation with no down payment and below-market interest rates.
- City of Boulder Solar Grants: Income-qualified Boulder city residents and non-profits can claim a solar grant of up to $8,000.
How To Qualify for the Federal Solar Tax Credit in Colorado
The federal solar tax credit, officially known as the Investment Tax Credit (ITC), is a nationally available incentive that offers savings on solar systems through a reduction in federal income taxes. When you install a solar system, you can apply for a tax credit worth 30% of your system’s purchase cost. You can apply this credit when you file your taxes for the year you purchased your system and roll over any remaining balance to future tax years.
For example, a homeowner with a system that costs $20,000 is eligible for a tax credit of $6,000, resulting in a reduced net cost of $14,000.
Do Colorado Utility Companies Offer Solar Rebates?
In Colorado, three different energy companies offer one or more solar incentives, as outlined below.
Xcel Energy Solar*Rewards Program
Xcel Energy offers a rebate program to customers who install a solar system. Eligible customers can receive a rebate of $1 per watt of installed capacity. However, the allotted budget for 2025 has been fully used, and homeowners may now only apply for this program in early 2026.
Xcel Energy Renewable Battery Connect
Xcel Energy customers who install Tesla Powerwall or SolarEdge home solar batteries can claim Xcel’s battery incentive. The incentive works by allowing Xcel Energy to charge or discharge up to 60% of your solar-powered battery up to 60 times per year to reduce energy demand on the electric grid. In exchange, the utility offers monetary incentives that include $350 per kilowatt (kW) of battery storage capacity, up to $5,000.
Black Hills Energy Solar Incentives
Black Hills Energy offers customers two incentives—a direct rebate and a performance based incentive. Income-qualified households can receive a rebate of $1 per watt of solar panel capacity and $100 per kW when paired with battery storage, along with a performance-based incentive of $0.038 per kilowatt-hour (kWh) of energy generated. Other customers can receive $100 per kW of solar and battery systems and a performance based incentive of $0.0025 per kWh. The company limits all one-time rebates to $1,000.
San Miguel Power Association (SMPA) Renewable Energy Rebates
SMPA customers can claim a direct rebate of $0.10 per watt of installed solar capacity, with a maximum available amount of $300. To qualify, SMPA requires solar installers to apply for the rebate on the customer’s behalf.
Net Metering in Colorado
Net metering allows solar panel owners to use their local power grid similarly to an energy storage system. With net metering, you can send excess solar energy produced by your system to the grid in exchange for billing credits. You can use these energy credits to purchase grid power for your home when your solar power is insufficient, such as at night or on cloudy days.
In Colorado, a customer’s net excess generation is applied as a kilowatt-hour credit to their utility account, with each kilowatt-hour credit offsetting 1 kWh of grid power usage in a future month. Any excess credits get rolled over indefinitely and only expire if you terminate your service. If you choose to cash in your excess credits, your utility will reimburse the credits at its “average hourly incremental cost” over that calendar year.
Solar Power Purchase Agreements in Colorado
A solar power purchase agreement (PPA) is an alternative to owning a solar system. This type of financing method allows homeowners to only buy the energy generated by a solar system installed on their property. However, the installer maintains ownership over the system. With a PPA, customers don’t need to pay any upfront costs and can still benefit from a lower price of electricity.
Numerous solar companies, including Sunrun, offer solar PPAs as a financing option. However, it’s important to note that you typically see significantly lower energy bill savings with a solar PPA compared to a system purchased in cash or with a loan. You also can’t claim certain solar incentives with a PPA since the installer maintains ownership of the system.
Solar Panel Costs in Colorado
The average cost of solar panels in Colorado ranges from $2.50–$3.33 per watt. This cost drops by 30% when you apply the federal solar tax credit. Additionally, any other local city and utility-based incentives can reduce this cost further. Check out the table below to learn more about pricing for common residential system sizes in Colorado based on an average price of $2.85 per watt.
| System Size | Average Cost | Cost After the Federal Tax Credit |
|---|---|---|
| 5 kW | $14,250 | $9,975 |
| 6 kW | $17,100 | $11,970 |
| 7 kW | $19,950 | $13,965 |
| 8 kW | $22,800 | $15,960 |
| 9 kW | $25,650 | $17,955 |
| 10 kW | $28,500 | $19,950 |
How To Apply for Solar Incentives in Colorado
Most solar incentives require you to apply online before completing your system installation. Your installer can apply for most incentives on your behalf, especially direct rebates and net metering interconnections. Take a look at some tips below on how to apply for incentive programs in Colorado.
Utility-Specific Solar Rebates
Utility companies usually have an online application portal for incentive applications. In some cases, you can apply in person with the required documents. In Colorado, Xcel Energy and Black Hills Energy require your installer to apply using each utility’s online portal for the respective incentives. SMPA customers, on the other hand, can apply themselves using the utility’s online form.
Property Tax Exemption
You don’t need to take any action to apply for Colorado’s property tax exemption. Your local county assessor should automatically exclude the value of your solar panels from your next home value assessment.
Net Metering
To apply for net metering, your installer must apply for a system interconnection before your solar installation is complete. The application is made to your local utility company, which will then inspect the system to ensure regulations were followed.
Federal Tax Credit
To apply for the federal solar tax credit, buyers must complete and submit the IRS Form 5695 when they file taxes for the year they installed a system.
Is Going Solar in Colorado Worth It?
Yes, our team found that going solar is worth it in Colorado thanks to the state’s high solar potential. The multiple available incentives in the state also make switching to solar power an attractive choice by offering upfront savings. Despite the higher upfront cost of a system, solar panels pay themselves off within a few years, offering reduced power bills and energy independence for multiple decades.
Other benefits of going solar in Colorado include reducing your carbon footprint and enjoying an increase in your home value. Some of the best solar companies operate in Colorado, offering high-quality equipment, installations, and a variety of payment options for homeowners with different budgets.
FAQs About Colorado Solar Incentives
How long does it take solar panels to pay for themselves in Colorado?
The average system in Colorado can pay itself off in about 10 years, based on our calculations. The time required for solar panels to pay themselves off in Colorado, also known as the payback period, varies based on factors such as the type of solar panels and resulting power generation, total system cost and layout, and more. For example, you may achieve a faster payback period with a smaller system that costs less.
Do solar panels increase home value in Colorado?
Yes, solar panels can increase home value in Colorado. Thanks to the many benefits offered by solar power systems, new home buyers may pay more for homes with solar panels already installed.
Do I need a permit to install solar panels in Colorado?
Yes, you will need one or more permits to install solar panels on your home in Colorado. This can include electrical and plumbing permits, zoning permits, and more. Your solar installer should handle the permitting process from start to end.
How long do solar panels last in Colorado?
Solar panels can last 30 years or longer, according to the U.S. Department of Energy. Most solar panels come with a 25-year product warranty, which covers their minimum lifespan. However, some components of your solar system may need replacement in 10–15 years, such as solar inverters or batteries.
