Aurora, CO Solar Panels

Colorado’s Property Tax Exemption for residential solar systems means that homeowners don’t pay property taxes on their solar equipment. When you install a solar system on your home, the added value from that equipment is completely exempt from property taxation. This applies specifically to the solar panels, inverters, and related equipment—not the underlying real property itself.

To qualify for this exemption, your solar system must be located on residential property, owned by you (the homeowner), produce electricity primarily for use in your home, and have a production capacity of no more than 100 kilowatts of AC electricity. Most residential solar systems fall well below this 100-kilowatt threshold, so typical home installations automatically qualify. The exemption is ongoing with no expiration date, meaning you’ll continue to avoid property taxes on your solar equipment for as long as you own it. This benefit helps ensure that investing in clean energy for your home won’t increase your annual property tax bill.

Colorado offers a sales and use tax exemption on the components needed to install a solar energy system. This means you won’t pay the state’s 2.9% sales tax on qualifying equipment like solar panels, inverters, mounting racks, wiring, and other essential system components. The exemption also applies to certain special district taxes, including the Regional Transportation District (RTD) and Scientific and Cultural Facilities District (SCFD) taxes.

The exemption automatically applies to state sales tax and most special district taxes. However, it does not automatically apply to city or county sales taxes unless your local government has specifically adopted the exemption through an ordinance or resolution. You’ll want to check with your city or county to see if they’ve opted in. The exemption covers equipment up to the point of generator step-up transformers at your property, but does not include labor costs, battery storage systems, or remote monitoring equipment. There are no application deadlines or time limitations—this exemption is available whenever you purchase qualifying solar components in Colorado.

Fort Collins Utilities offers cash rebates to residential customers who install solar panels and battery storage systems. The program provides $200 per kilowatt (kW) of solar capacity installed, up to a maximum rebate of $1,000 for solar systems. Battery storage earns an additional $150 per kilowatt-hour (kWh) of capacity, up to $3,000. The combined maximum rebate for both solar and battery is $4,000. For example, a typical 5 kW solar system would earn the full $1,000 solar rebate, and adding a 20 kWh battery would earn the maximum $3,000 battery rebate.

To qualify, you must be a Fort Collins Utilities electric customer and work with one of their approved Participating Solar Contractors from start to finish. Your solar system must be at least 0.5 kW in size, use new UL-listed equipment, and meet the utility’s interconnection standards. The rebate may be reduced if your system produces less than 90% of optimal output due to shading or poor orientation. In exchange for the rebate, you’ll assign the renewable energy credits (RECs) from your system to Fort Collins Utilities for 20 years. Your system must be installed within six months of receiving your rebate reservation letter, and you’ll receive your rebate check after passing the final utility inspection. On-bill financing is available through the Epic Loan program for eligible projects.

San Miguel Power Association (SMPA) offers cash rebates to members who install solar photovoltaic systems on their properties. This utility program provides a straightforward rebate of $0.10 per watt of installed solar capacity to help offset the upfront cost of going solar. The rebate is designed to support both residential and commercial customers in the SMPA service area who want to invest in renewable energy.

Residential customers can receive up to $300 (capped at 3 kW of system capacity), while commercial customers can receive up to $1,000 (capped at 10 kW). To qualify, you must be an SMPA member, and your contractor must complete and submit all rebate paperwork on your behalf using SMPA’s official application forms. While contractors don’t need to pre-register with SMPA, they must meet certain eligibility requirements, and deadlines do apply to the application process. For specific questions about your eligibility or the application timeline, contact SMPA Member Services at (970) 626-5549 or [email protected].

The Xcel Energy Solar*Rewards Program for Low Income customers provides enhanced financial incentives to help income-qualified homeowners in Colorado afford solar energy systems. This utility program offers upfront cash payments for installing solar panels on your home, with significantly higher payment rates than the standard Solar*Rewards program. The incentive is designed to make clean energy more accessible to households that meet income eligibility requirements.

Eligible participants receive $0.08 per kilowatt-hour (kWh) for the solar energy their system is expected to produce over the first 20 years. For a typical residential solar system, this can translate to several thousand dollars in upfront payments. To qualify, you must be an Xcel Energy electric customer in Colorado, meet income guidelines (typically at or below 80% of area median income), and install a new solar system that meets program requirements. The program operates on a first-come, first-served basis with limited annual funding, so incentive rates and availability can change throughout the year as funds are allocated. It’s important to apply before installing your system and to work with a qualified solar installer who is familiar with Xcel Energy’s application process and technical requirements.

The Xcel Energy Solar*Rewards Program – Renewable Battery Connect is a utility incentive that pays Colorado homeowners for allowing Xcel Energy to access stored energy in their home battery systems during times of high electricity demand. When you enroll your battery in this program, Xcel Energy can draw power from your battery during peak usage periods to help stabilize the electric grid. In return, you receive annual payments for making your battery available to support the community’s energy needs.

The financial benefit is structured as an annual payment based on your battery’s capacity and availability. Xcel Energy compensates participants for the amount of energy storage capacity they commit to the program, with payments varying depending on the size of your battery system and how often it’s called upon. To be eligible, you must be an Xcel Energy customer in Colorado with an approved battery storage system installed at your home. Your battery must meet specific technical requirements and be able to communicate with Xcel Energy’s dispatch system.

Enrollment is typically ongoing, though program capacity may be limited and subject to availability in your service area. Once enrolled, your commitment period and payment terms will be outlined in your participation agreement. It’s important to understand that when Xcel Energy dispatches your battery, it will reduce the stored energy available for your own use during those events, though you maintain control over a reserve amount for backup power needs. This program works best for homeowners who want to maximize the value of their battery investment while supporting grid reliability in their community.

The City of Boulder offers a sales and use tax rebate for residents and businesses who install solar electric (photovoltaic) or solar thermal (hot water) systems on their property. This rebate returns approximately 15 percent of the city sales and use tax you paid on materials and permits for your solar installation. Enacted in 2008, this program helps reduce the upfront cost of going solar by refunding a portion of the local taxes paid during your project.

To qualify, you must submit your rebate application within 12 months of the city’s final inspection of your solar system. You’ll need to complete the Solar Tax Rebate Application and Affidavit of Legal Residency, and provide receipts from your project along with a photocopy of your identification. Keep in mind that rebates are subject to funding availability, so it’s wise to apply as soon as your installation is complete and inspected. For questions or to submit your application, contact the Finance – Tax & License Division at [email protected] or 303-441-3051.

Net metering in Colorado allows you to receive credit for the excess solar energy your system produces and sends back to the electric grid. When your solar panels generate more electricity than your home uses, that surplus energy flows to the grid, and your utility meter essentially runs backward, crediting your account. These credits offset the electricity you draw from the grid when your panels aren’t producing enough power, such as at night or on cloudy days.

Colorado utilities offer 1:1 net metering, meaning you receive full retail rate credit for every kilowatt-hour (kWh) you export to the grid. Your monthly credits typically roll over from month to month as either dollar credits or kWh credits, depending on your utility provider. However, the way excess credits are handled at the end of the year varies significantly by utility. Some utilities, like Xcel Energy and Black Hills Energy, give you the choice to either roll credits over indefinitely or cash them out annually at a lower rate (typically 1.5-2 cents per kWh). Other utilities, such as United Power and CORE Electric Cooperative, automatically cash out remaining credits once per year at their avoided cost rate (ranging from 4-5.5 cents per kWh). Colorado Springs Utilities offers either indefinite rollover or a year-end cash out at 2 cents per kWh.

Net metering is generally available to homeowners who install solar panels and interconnect with their utility, though specific system size limits and technical requirements vary by provider. There are no application deadlines, but it’s important to understand your utility’s annual true-up schedule—most occur in March or April. If you choose the rollover option with certain utilities, keep in mind that you’ll forfeit any accumulated credits if you move. For most homeowners, the rollover option provides greater value than cashing out at the low avoided cost rates, as using those credits later to offset your full retail electricity rate saves significantly more money.