Denver, 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 value of that solar equipment is completely exempt from property taxation. This applies to the solar panels, inverters, and related equipment—though 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 easily fall within this capacity limit. The exemption is automatic and ongoing—there’s no expiration date or time limitation. This means you’ll continue to avoid property taxes on your solar equipment for as long as you own it, helping reduce the overall cost of going solar while keeping your property tax bill unchanged despite adding valuable energy-producing equipment to your home.

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 eligible 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 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. You’ll want to check with your city or county to see if they’ve chosen to exempt solar components from their local sales tax. The exemption covers equipment up to the point of connection but does not include labor costs, battery storage systems, or monitoring equipment. There are no application deadlines or time limitations—this exemption is available whenever you purchase qualifying solar components.

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. Battery storage systems earn 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 per installation. These rebates help offset installation costs, which typically range from $3,500 to $4,000 per kW in Fort Collins.

To qualify for the 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 system must be at least 0.5 kW in size and use new, UL-listed equipment from their eligible equipment list. The system must be installed within six months of receiving your rebate reservation letter. In exchange for the rebate, you’ll assign the renewable energy credits (RECs) generated by 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 first, as these often provide better financial returns. The program also encourages you to consider your roof’s condition and solar potential—ideally, your installation site should have uninterrupted sun from 9 a.m. to 3 p.m. If you have trees that create shade during these hours, you may need to submit a shading analysis, and your rebate amount could be reduced if your system generates less than 90% of optimal production. 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 homeowners and businesses in the SMPA service area who want to invest in renewable energy.

For residential solar installations, you can receive up to $300 (capped at 3 kilowatts of capacity). Commercial properties qualify for larger rebates of up to $1,000 (capped at 10 kilowatts). Your solar contractor must complete and submit the rebate application 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 submissions. For questions about the program or to confirm your eligibility, 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 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 qualification requirements.

Eligible participants receive upfront payments based on the size of their solar system, measured in kilowatts (kW). The exact payment amount varies depending on current program funding and capacity blocks, but low-income customers receive substantially higher per-watt incentives compared to standard program participants. To qualify, you must be an Xcel Energy electric customer in Colorado and meet income eligibility guidelines, typically at or below 80% of the area median income. You’ll need to provide documentation of your income status and work with an approved solar installer.

Important considerations include that this program operates on a first-come, first-served basis with limited funding available each year, so applying early is essential. Your solar system must meet specific technical requirements and be installed by a contractor participating in Xcel Energy’s Solar*Rewards program. The incentive is paid after your system is installed and passes inspection, and you’ll continue to receive credit for excess energy your system produces through net metering. Contact Xcel Energy directly to confirm current incentive levels, verify your eligibility, and check program availability before moving forward with your solar project.

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 balance the electric grid. In return, you receive annual payments for making your battery available to support the community’s energy needs.

Homeowners receive $300 per year for each enrolled battery system. This payment is provided as a bill credit and continues as long as you remain in the program. To participate, you must be an Xcel Energy customer in Colorado with a qualifying battery storage system connected to solar panels. Your battery must meet specific technical requirements and be able to communicate with Xcel Energy’s systems. The program requires batteries to be available for dispatch during designated peak demand periods, typically on summer and winter afternoons and evenings.

There are no application deadlines, but enrollment is subject to program capacity limits. Once enrolled, you commit to a multi-year participation period. It’s important to know that during dispatch events, Xcel Energy will draw power from your battery, which may reduce the energy available for your home use during those times. However, you maintain control over a reserve portion of your battery for backup power needs. This program works well 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. Contact the Sales Tax Division at [email protected] or 303-441-3051 with any questions about your eligibility or application.

Net metering in Colorado allows you to earn credits when your solar panels produce more electricity than your home uses. These excess kilowatt-hours (kWh) are sent back to the grid, and your utility company credits your account at a 1:1 rate—meaning each kWh you send to the grid offsets one kWh you use later. This helps reduce or even eliminate your monthly electric bill, especially during months when your solar production is lower than your energy needs.

How your credits are handled depends on your specific utility company. Most Colorado utilities let you carry credits forward month-to-month as either dollar or kWh credits. At the end of a designated period (typically March or April), you’ll face an annual “true-up” where excess credits are either cashed out at a reduced rate (typically between 1.5 to 5.5 cents per kWh depending on your utility) or rolled over indefinitely. Some utilities like Xcel Energy and Black Hills Energy give you a choice: take a small cash payment for unused credits, or keep rolling them over to use later. Palmetto generally recommends the rollover option since using credits at full retail value later provides much greater savings than accepting a few cents per kWh.

Net metering is available to all residential solar customers in Colorado, though specific program details vary by utility provider. There are no application deadlines, but you’ll need to complete an interconnection agreement with your utility before your system can be connected to the grid. Keep in mind that if you choose the indefinite rollover option and later move, you’ll typically forfeit any remaining credits, so it’s worth considering your long-term plans when selecting your credit option.