Pueblo, 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 solar panels and related equipment are classified as personal property that’s exempt from taxation. This exemption applies specifically to the solar equipment itself—not the underlying real property value of your home.

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. Your county assessor may review home sales to determine if solar systems contribute to property values, and if they do, adjustments are made to exclude the solar equipment’s value from your taxable assessment. This exemption helps ensure that investing in clean energy for your home doesn’t result in higher annual property tax bills.

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 financial benefit depends on your total system cost, but on a typical residential solar installation of $25,000, you could save approximately $725 in state sales tax alone. Keep in mind that this exemption does not apply to labor costs, energy storage devices like batteries, or monitoring systems. Additionally, while the state tax exemption is automatic, most county and city sales taxes are not included unless your local government has specifically adopted this exemption by ordinance. You’ll want to check with your installer about which local taxes apply in your area, as savings can vary by location.

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 incentive 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 incentive.

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 (500 watts minimum), and battery systems must be at least 6 kWh. 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) from your system to Fort Collins Utilities for 20 years. The program also requires that you manage trees and shading to ensure your solar panels receive uninterrupted sun from 9 a.m. to 3 p.m. Your rebate may be reduced if shading causes your system to produce less than 90% of optimal output. Fort Collins Utilities recommends completing an Epic Homes energy assessment before installing solar to identify cost-effective efficiency improvements first.

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 members in their transition to renewable energy.

Residential solar installations are eligible for up to $300 (capped at 3 kW of capacity), while commercial installations can receive up to $1,000 (capped at 10 kW). To receive the rebate, you must be an SMPA member, and your contractor must complete and submit the application on your behalf. The contractor must meet certain eligibility requirements, though they don’t need to be pre-registered with SMPA. Be aware that deadlines apply to these rebates, so it’s important to contact SMPA Member Services at (970) 626-5549 or [email protected] early in your planning process to confirm current program availability and requirements.

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 higher upfront payments compared to the standard Solar*Rewards program, making clean energy more accessible to households that meet income requirements. The incentive is paid directly to you based on the size of your solar system, helping reduce your overall installation costs.

To qualify for this program, 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 apply before installing your solar system and receive approval from Xcel Energy. The program operates on a first-come, first-served basis with limited funding each year, so it’s important to apply early. Your solar system must be installed by a qualified contractor and meet all technical requirements set by Xcel Energy. Once your system is installed and approved, you’ll receive your incentive payment and begin enjoying lower electric bills from your solar energy production.

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, and you receive annual payments in return for this service.

Participating 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 and your battery stays connected. Your battery must be capable of providing at least 5 kilowatts of power and storing at least 10 kilowatt-hours of energy to qualify. The program requires that your battery be connected to Xcel Energy’s grid management system, which means the utility can dispatch energy from your battery when needed, typically during summer afternoons and evenings when electricity demand peaks.

To participate, you must be an Xcel Energy customer in Colorado with an eligible battery storage system installed at your home. The battery must be new or recently installed, and you’ll need to sign a program agreement that outlines when and how Xcel Energy can access your stored energy. Keep in mind that during dispatch events, some of your battery’s stored energy will be used to support the grid rather than being available for your home, though the system is designed to maintain a reserve for your essential needs.

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 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. This is a straightforward way to get money back on the local taxes you paid for your solar investment.

Net metering in Colorado allows you to earn credits when your solar panels produce more electricity than your home uses. Your utility company tracks this excess energy and applies credits to your account, which you can use to offset future electric bills. Most Colorado utilities offer 1:1 net metering, meaning each kilowatt-hour (kWh) of excess solar energy you send to the grid earns you a credit equal to the retail rate you’d normally pay for electricity.

How credits are handled varies by utility company. With Xcel Energy, Black Hills Energy, and Colorado Springs Utilities, you can choose between rolling credits over indefinitely or cashing them out annually at a lower rate (typically 1.5-4 cents per kWh). United Power, CORE Electric Cooperative, and DMEA automatically cash out excess credits once per year in April at their avoided cost rate (ranging from 3-5.5 cents per kWh). Grand Valley Power operates differently with time-of-use rates, where energy generated during peak hours only offsets consumption during peak hours, and they cash out excess credits above certain thresholds.

Net metering is available to solar customers across Colorado, though specific program details depend on your utility provider. There are no application deadlines, but it’s important to understand your utility’s annual true-up schedule—this is when any remaining credits are either cashed out or forfeited. If you have the option to roll over credits indefinitely, this is typically more valuable than accepting a cash payment at the low avoided-cost rate, unless you’re planning to move soon.