Colorado Springs, 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 it brings to your property is completely exempt from property taxation. This exemption applies specifically to the solar equipment itself—the panels, inverters, and related components—though your home’s underlying real property value remains taxable as usual.

To qualify for this exemption, your solar system must be located on residential property, owned by you (the homeowner), and primarily used to produce electricity for your home’s consumption. The system must have a production capacity of no more than 100 kilowatts of AC electricity, which is well above what most homes need. The exemption applies automatically once your system is installed and operational—there’s no expiration date or time limit on this benefit.

It’s worth noting that if you’re purchasing your home, the county assessor may adjust comparable sales data to account for solar systems during property valuations. Additionally, some Colorado counties and municipalities offer their own local property tax credits or rebates for renewable energy installations, so it’s worth checking with your local government to see if additional incentives are available in your area.

Colorado offers a sales and use tax exemption for components used in residential solar energy systems. This exemption applies to state sales tax (currently 2.9%) and certain special district taxes, including the Regional Transportation District (RTD) and Scientific and Cultural Facilities District (SCFD). The exemption covers essential solar equipment such as solar panels, inverters, mounting racks, wiring, control systems, and other components needed to generate electricity from solar energy.

The exemption automatically applies at the point of sale for state and participating special district taxes. However, it typically does not apply to city or county sales taxes unless your local municipality has specifically adopted the exemption by ordinance. Since local tax rates vary across Colorado, the total savings will depend on your location. For example, on a $25,000 solar system, you could save approximately $725 in state sales tax alone, with potential additional savings if your city or county participates in the program.

There are no application deadlines or income requirements for this exemption. The exemption does not cover labor costs, energy storage devices like batteries, or remote monitoring systems. To confirm whether your city or county offers this exemption, check with your solar installer or contact your local tax authority directly, as home-rule cities administer their own tax policies independently.

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 systems earn an additional $150 per kilowatt-hour (kWh) of capacity, up to $3,000. The combined maximum incentive for both solar and battery is $4,000 per installation. These rebates help offset installation costs, which typically range from $3,500 to $4,000 per kW in the Fort Collins area.

To qualify for this rebate, 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 (battery systems must be at least 6 kWh), and all equipment must be new and UL-listed. The system must be installed within six months of receiving your rebate reservation letter. In exchange for the incentive, you’ll assign the renewable energy credits (RECs) from your system to Fort Collins Utilities for 20 years.

Before installing solar, Fort Collins Utilities strongly recommends starting with an Epic Homes energy assessment to identify efficiency improvements that may provide better financial returns. They also encourage homeowners to avoid removing healthy trees for solar installation, as trees provide significant energy savings and property value benefits. The utility offers on-bill financing through their Epic Loan program, and Colorado residents may qualify for state sales tax exemptions on solar equipment. Applications are submitted through the PowerClerk platform by your chosen contractor.

San Miguel Power Association (SMPA) offers rebates to members who install solar photovoltaic systems at their homes or businesses. This utility program provides a straightforward cash rebate based on the size of your solar system, helping to reduce your upfront installation costs. The rebate is calculated at $0.10 per watt of installed solar capacity.

For residential solar installations, you can receive up to $300 (capped at 3 kilowatts). Commercial solar installations qualify for a higher rebate of up to $1,000 (capped at 10 kilowatts). Your solar contractor must complete and submit all rebate paperwork on your behalf—homeowners cannot apply directly. While contractors don’t need to pre-register with SMPA, they must meet certain eligibility requirements, and deadlines do apply to applications.

It’s important to work with your solar installer early in the process to ensure they’re familiar with SMPA’s requirements and can properly handle the rebate application. For questions about eligibility or the application process, 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 qualifying Colorado homeowners afford solar energy systems. This utility program offers upfront cash payments for installing solar panels, with higher payment rates specifically designed to make solar more accessible for households with limited income. The program is part of Xcel Energy’s commitment to expanding clean energy access across all communities in their service territory.

Eligible participants receive upfront incentive payments based on the size of their solar system, with rates significantly higher than the standard Solar*Rewards program. To qualify, homeowners must be Xcel Energy customers in Colorado, own their home, and meet income eligibility requirements (typically at or below 80% of area median income). The program has limited funding that is allocated on a first-come, first-served basis, so interested homeowners should apply early. Applications are accepted throughout the year, but the program can close once funding is exhausted, and it’s subject to annual budget availability.

Important considerations include that the solar system must be installed by an approved contractor, and all installations must meet Xcel Energy’s technical requirements and pass inspection. Homeowners should verify their income eligibility before beginning the application process and confirm current incentive rates and funding availability, as these can change annually. This incentive can be combined with other state and local programs to further reduce the cost of going solar.

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 ability to dispatch their battery storage when needed, typically during summer afternoons and evenings when electricity demand is highest. The exact payment amount depends on your battery size and the specific program tier you qualify for. 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 technical requirements for communication and control, allowing Xcel Energy to remotely manage discharge events. Program enrollment is subject to availability, and Xcel Energy may limit participation based on grid needs in your area. It’s important to understand that during dispatch events, your battery will be used to supply power to the grid, which may reduce the stored energy available for your own backup needs during those specific times.

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 you’ve already paid.

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. This rebate works alongside other incentives to make your solar investment more affordable.

Net metering in Colorado allows you to receive credit for the excess solar energy your system sends back to the electric grid. When your solar panels produce 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 then offset the electricity you draw from the grid when your panels aren’t producing enough power, like at night or on cloudy days.

The specific benefits vary by utility provider. Most Colorado utilities offer 1:1 net metering, meaning you receive the full retail rate for excess energy as a credit on your bill. Xcel Energy, United Power, Black Hills Energy, and several other providers allow you to carry credits forward month-to-month as dollar or kilowatt-hour credits. At the end of the year (typically in March or April), you’ll face a “true-up” period where remaining credits are either cashed out at a lower rate (typically 1.5 to 5.5 cents per kWh depending on your utility) or rolled over indefinitely. For example, Xcel Energy customers can choose between receiving payment at about 1.5 cents per kWh or rolling credits over indefinitely—though Palmetto recommends the rollover option since using credits at full retail value later is far more valuable than a small cash payment.

Net metering is generally available to residential solar customers, though specific system size limits and requirements vary by utility. There are no application deadlines, but you must have an approved interconnection agreement with your utility before your system can be connected to the grid. One important consideration: if you choose the rollover option and later move, you’ll typically forfeit any remaining credits, so the cash-out option might make sense if you’re planning to relocate soon. Grand Valley Power Cooperative has unique time-of-use rules where energy generated during one rate period cannot offset consumption during a different rate period, so understanding your utility’s specific policies is essential.