Colorado Solar Panels

Colorado’s Property Tax Exemption protects homeowners from paying property taxes on residential solar systems. If you install solar panels on your home that produce electricity primarily for your own use (up to 100 kilowatts of AC capacity), the added value from that solar equipment is exempt from property taxation. This means your property tax bill won’t increase due to the solar installation, even though solar panels typically add value to your home.

To qualify, your solar system must be located on residential property, owned by you (the homeowner), and used primarily to power your home. The exemption applies only to the solar equipment itself—not the underlying real property. There are no application deadlines or time limitations; the exemption continues as long as you own the qualifying solar system. This benefit is automatic in Colorado, though your county assessor may need to verify that your system meets the requirements during property assessments.

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 passed an ordinance to include this benefit. The exemption covers equipment and components but does not include labor costs, energy storage devices like batteries, or remote monitoring systems. There are no application deadlines or time limitations—this exemption is available whenever you purchase qualifying solar equipment 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. 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 the upfront cost of going solar, which typically ranges 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 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 program requires you to assign 20 years of Renewable Energy Credits (RECs) to Fort Collins Utilities in exchange for the incentive. Systems must be installed within six months of receiving your rebate reservation letter.

Before installing solar, Fort Collins Utilities strongly recommends starting with an Epic Homes energy assessment to identify cost-effective efficiency improvements first. They also encourage homeowners to avoid removing healthy trees for solar installation, as trees provide significant energy savings and property value. The rebate amount may be reduced if your system is shaded between 9 a.m. and 3 p.m. or produces less than 90% of optimal output. Financing is available through the Epic Loan program, and the rebate is paid by check after your system passes final inspection.

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 to help offset installation costs. The rebate is designed to support local renewable energy adoption in SMPA’s service area in Colorado.

Residential solar installations receive $0.10 per watt, up to a maximum system size of 3 kW (which equals a $300 maximum rebate). Commercial solar installations receive the same rate of $0.10 per watt but can claim rebates for larger systems up to 10 kW (which equals a $1,000 maximum rebate). Your 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 learn about additional renewable energy rebates for small wind, hydro, or biomass systems, 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 higher payment rates than the standard Solar*Rewards program to make clean energy more accessible to households with limited income.

Eligible participants receive an upfront incentive payment based on the size of their solar system, paid directly after installation and inspection. To qualify, you must be an Xcel Energy residential electric customer in Colorado and meet income qualification requirements, typically at or below 80% of the area median income or participation in qualifying assistance programs. The program operates on a first-come, first-served basis with limited annual funding, so early application is important. You’ll need to work with an approved solar installer and complete the application process before installing your system to secure your incentive reservation.

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 exchange, 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 made annually for the duration of your enrollment. The exact payment amount depends on your specific battery size and the terms of your participation agreement.

To be eligible, you must be an Xcel Energy customer in Colorado with an approved battery energy storage system installed at your home. Your battery must meet Xcel Energy’s technical requirements and be capable of communicating with their grid management systems. You’ll need to complete an application process and sign a participation agreement that outlines when and how Xcel Energy can access your battery’s stored energy. It’s important to understand that during dispatch events, Xcel Energy will use a portion of your battery’s capacity, which may limit the backup power available for your home 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 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 include 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 recover some of your investment while supporting Boulder’s commitment to clean energy.

Net metering in Colorado allows you to earn credits when your solar panels produce more electricity than your home uses. When your system generates excess energy, it flows back to the grid, and your utility company credits your account. These credits work like a bank account—you can use them to offset your electric bill during months when your panels don’t produce enough power, such as during winter or cloudy periods.

The specific benefits depend on your utility provider. Most Colorado utilities offer 1:1 net metering, meaning you receive full retail rate credit for every kilowatt-hour (kWh) you send to the grid. Credits typically roll over month to month as either dollar credits or kWh credits. However, how excess credits are handled varies by utility. For example, Xcel Energy and Black Hills Energy let you choose between rolling credits over indefinitely or cashing them out annually at a lower rate (around 1.5 cents per kWh). United Power, CORE Electric Cooperative, and DMEA automatically cash out remaining credits once per year in April at their avoided cost rate (typically 3-5.5 cents per kWh). Colorado Springs Utilities offers either indefinite rollover or a year-end cash out at 2 cents per kWh.

To participate in net metering, you’ll need to install a solar energy system and complete an interconnection agreement with your utility company. There are no application deadlines, but it’s important to understand your utility’s specific policies before going solar. If you choose a rollover option with certain utilities, keep in mind that unused credits will be forfeited if you move. Your Palmetto energy advisor can help you understand which option makes the most financial sense for your situation and ensure your system is sized appropriately to maximize your savings.