Colorado

Colorado offers a Property Tax Exemption for residential solar systems that provides significant financial relief for homeowners who install solar panels. Under this state tax exemption, renewable energy personal property located on residential property, owned by the homeowner, and used to produce energy for that property is completely exempt from property taxation in Colorado.

To qualify for this exemption, your solar electric generation system must be located on residential property, primarily used to produce electricity for your home, and have a production capacity of no more than 100 kilowatts of AC electricity. This exemption applies only to the solar equipment itself, not to the underlying real property. The exemption is permanent with no expiration date, allowing homeowners to enjoy property tax savings for the lifetime of their solar system.

Colorado offers a Sales Tax Exemption for solar equipment that eliminates state sales tax on components used in solar energy systems. This exemption applies to key solar system parts including solar modules, inverters, supporting structures, wiring, and control systems. By not having to pay state sales tax on these components, homeowners can save approximately 2.9% on the cost of their solar installation.

The exemption automatically applies to state-level taxes and certain special district taxes like RTD and Cultural Facilities District taxes. However, it’s important to note that most city and county sales taxes still apply unless they’ve specifically adopted the exemption by local ordinance. Additionally, the exemption doesn’t cover labor costs, energy storage devices (like batteries), or remote monitoring systems. There are no deadlines or expiration dates for this ongoing incentive program.

Fort Collins Utilities offers solar rebates to residential customers who install solar photovoltaic (PV) systems. Homeowners can receive $200 per kilowatt of DC generating capacity installed, up to a maximum of $1,000. Battery storage installations are also eligible for $150 per kWh of capacity, up to $3,000. The combined maximum incentive available is $4,000 per system.

To qualify, you must be a Fort Collins Utilities electric customer and work with a contractor from their Participating Solar Contractor Network. Systems must be at least 500 watts, meet interconnection standards, and use new, UL-listed equipment. The system must be installed within six months of receiving the rebate reservation letter. In exchange for the rebate, homeowners assign 20 years of Renewable Energy Credits (RECs) to Fort Collins Utilities. This program complements the 30% federal tax credit available for solar installations through 2032.

The San Miguel Power Association (SMPA) Solar Rebates program offers financial incentives to homeowners and businesses installing renewable energy systems in their service area. Residential customers can receive $0.10 per watt for solar photovoltaic installations, up to a maximum of 3kW or $300. Commercial customers are eligible for the same rate of $0.10 per watt but with a higher cap of 10kW or $1,000. The program also includes similar rebates for small wind systems.

To qualify, your contractor must complete and submit the required rebate paperwork on your behalf. While contractors don’t need to be pre-registered with SMPA, they must meet certain eligibility requirements. The application process is administered directly by SMPA, and important deadlines apply to these rebates. For specific questions or additional information, homeowners can contact SMPA Member Services at (970) 626-5549 or email [email protected].

The Xcel Energy Solar* Rewards Program – Low Income is a special initiative designed to make solar energy accessible to income-qualified households in Colorado. Through this program, Xcel Energy provides additional financial incentives to help lower-income residents install solar panels on their homes, reducing both their environmental impact and monthly energy costs.

Participants receive production-based incentives (PBI) for the electricity their solar system generates, paid through monthly bill credits over a 10-year period. The program also offers upfront incentives to help offset installation costs, making solar more affordable for those who might otherwise be unable to participate in clean energy opportunities.

To qualify, households must meet income eligibility requirements (typically at or below 80% of the area median income) and be Xcel Energy customers in Colorado. The solar installation must be completed by an approved contractor and meet Xcel’s technical specifications. The system size is typically limited to what’s needed to offset the household’s actual electricity usage.

This program operates on a first-come, first-served basis with limited funding each year, so interested homeowners should apply as early as possible. Xcel Energy may open application windows at specific times throughout the year until program capacity is reached.

Before applying, homeowners should consider that participation requires a solar system that meets Xcel’s requirements and may involve a home energy assessment. Additionally, participants will need to sign a 10-year contract with Xcel Energy for the production incentives, during which time they’ll receive monthly credits based on their system’s actual electricity generation.

The Xcel Energy Solar* Rewards Program – Renewable Battery Connect is a utility incentive program available to Colorado homeowners who install battery storage systems alongside their solar panels. Through this program, Xcel Energy provides financial incentives to customers who allow the utility to access their battery storage during peak demand periods, helping to stabilize the grid while providing homeowners with backup power security.

Participants receive a monthly bill credit based on the capacity of their battery system, which helps offset the cost of installation over time. To qualify, you must be an Xcel Energy customer in Colorado with a grid-connected solar system and compatible battery storage. The program requires signing an agreement that allows Xcel to discharge your battery during high-demand periods, though you’ll always maintain a reserve for personal emergency use. This program represents an opportunity to enhance the value of your home energy system while contributing to grid reliability in your community.

The City of Boulder Solar Tax Rebate program offers financial relief to residents and businesses who install solar electric or solar thermal (hot water) systems on their property. Established in 2008, this incentive rebates approximately 15% of the city sales and use tax paid on materials and permits for solar installations. This can help offset the initial cost of going solar while supporting Boulder’s climate action goals.

To qualify, applicants must submit their rebate application within 12 months of the city’s final inspection of their solar installation. The application process requires completing the Solar Tax Rebate Application form and an Affidavit of Legal Residency, along with submitting receipts from the project and a photocopy of identification. It’s important to note that these rebates are subject to funding availability, so interested homeowners should apply promptly after their installation is complete to ensure they don’t miss out on this opportunity.

Net Metering in Colorado is a valuable program that allows solar homeowners to receive full credit for the excess electricity their systems generate. When your solar panels produce more electricity than you’re using, that excess power is sent back to the grid, and you receive a credit on your utility bill at a 1:1 ratio. This means for every kilowatt-hour (kWh) you send to the grid, you get a full retail-value credit that can offset the cost of electricity you draw from the grid when your solar system isn’t producing enough.

The specific handling of excess credits varies by utility company in Colorado. Most utilities allow unused credits to roll over month-to-month, but have different policies for annual true-ups. For example, Xcel Energy and Black Hills Energy customers can choose between indefinite rollover of credits or an annual cash-out at the utility’s avoided cost rate (approximately 1.5 cents/kWh). Colorado Springs Utilities offers similar options with a 2 cents/kWh cash-out rate, while CORE Electric Cooperative (formerly IREA) automatically cashes out credits at the end of April at their avoided cost rate (currently 5.5 cents/kWh). For most homeowners, the rollover option typically provides better long-term value than the cash-out option, as you can use those credits during less sunny months.