
Colorado, known for its picturesque landscapes and abundant sunshine, is an ideal location for solar energy production. With over 300 days of sunshine annually, homeowners in Colorado can easily make use of the sunshine to power their homes. Solar panels actually perform more efficiently in higher altitudes due to cooler temperatures and less atmospheric interference.
Colorado was the first state to establish a Renewable Portfolio Standard, passing Amendment 37 in 2004. With this, the state set a goal for 10% renewable power by 2015. As of 2023, renewable energy accounted for almost 40% of Colorado’s energy generation. Colorado solar incentives are available in tax credits, rebates, and loan programs from cities, utilities, and the state.
Colorado ranks 12th in overall residential solar capacity and has experienced significant growth in the utility-scale sector in recent years. SEIA notes that just under 9% of homes in Colorado have solar on them, so there is a ton of room for growth, and we’re likely to see continued, steady growth in Colorado.
There are a number of incentives available to Colorado homeowners looking to go solar. You can learn more about Colorado solar incentives by following the program link or by visiting DSIRE for more incentive and policy information.
Table of Contents
Federal Solar Incentives
Federal Investment Tax Credit (ITC)
Residential solar systems installed in Colorado are eligible for the Federal ITC, which provides up to 30% credit toward the total cost of a solar system. The Inflation Reduction Act (IRA) of 2022 extended the 30% credit through 2032. Starting in 2033, the ITC value will drop to 26%, followed by a drop to 22% in 2034.
The credit is non-refundable, meaning it cannot exceed the amount you owe in tax and would not directly increase any refund you would receive. Excess credit can be carried forward and used in future years.
The IRA also included standalone or retrofitted energy storage projects, so batteries added to the system’s quality for the 30% tax credit.
Recently, the US House of Representatives passed their version of the “One Big Beautiful Bill” Act, which includes repeals of sections 25D and 48E solar tax credits. The US Senate’s version, that is yet to be passed, would end the tax credit six months after the bill passes, so this credit may not be around for long. Learn more about the impact this may have.
Modified Accelerated Cost Recovery System (MACRS)
IRS section 179 depreciation allows certain qualified properties to be classified as 5-year properties, and tax credits are taken on the depreciation. This credit applies to commercial sites and certain investment properties. Specific information on what qualifies can be found on the IRS website.
State Solar Incentives & Programs
Property Tax Exemption
Colorado homeowners who install solar can take advantage of a property tax exemption for their solar energy system. Under this provision, 100% of the additional value added to a home from installing a solar energy system is exempt from additional property taxes. Recent studies have shown solar panels to increase a home’s value between 5%-10%. Zillow reports the average single-family Colorado home value to be $556,482, so a home installing solar would likely see a value increase of $27,000 – $55,000 after installing solar. Thanks to the property tax exemption, they won’t have to pay additional property taxes on that value.
Sales Tax Exemption
Solar and storage equipment are exempt from sales tax in Colorado, making systems more affordable for homeowners. The sales tax exemption was first enacted in 2006. With a state sales tax of 2.9%, a home installing $30,000 worth of solar equipment saves $870 thanks to this solar incentive.
Xcel Energy – Solar*Rewards Program
Xcel Energy, an electric utility company, offers a solar rebate program that has up-front and continuing payments for solar installations. Payments based on performance are limited to commercial and industrial installations. For residential solar installations, Xcel only offers an upfront incentive of $1 per watt of installed solar to those who qualify under their “low-income” guidelines, which means household income is at or below 80% of the area median income. Homeowners can also qualify if they are participating in energy assistance programs.
The Solar*Rewards program has a limitation of 10 kW AC, meaning a qualified homeowner could get as much as $10,000. The program has a very limited capacity and hit full capacity for 2025 as of January 7th.
Xcel Energy – Renewable Battery Connect
Xcel’s Renewable Battery Connect program is a virtual power plant solar incentive for homeowners installing batteries. Specifically, homeowners need to install either a Tesla Powerwall 2, Powerwall +, Powerwall 3, or Enphase IQ Battery to qualify. Virtual Power Plants allow electric utilities to remotely discharge power from a home’s battery to stabilize the grid in times of high demand.
The Renewable Battery Connect program will pay an upfront incentive of $350/kW of Max Continuous Discharge Power up to $5,000 per application. Batteries have different max discharge capabilities, so it’s important to check your equipment’s data sheet. For example, if a battery has a discharge rate of 5 kW, it could receive $1,750. Income income-qualified customer can receive $800 or kW of max continuous discharge power.
By signing up for the program, homeowners allow Xcel to discharge their battery up to 60% of its total capacity, a max of 60 times per year.
Holy Cross Energy – Renewable Energy Rebate
Holy Cross Energy has a solar rebate program that pays homeowners up to 40% of the total installed cost of a project. Homeowners who take their electric service through Holy Cross, have systems under 25kW, and work with a preferred installer can qualify. The installed system must also produce less than 200% of the home’s previous 12 months of electric consumption.
Renewable energy systems can receive a maximum incentive of $30,000, and energy storage systems have a maximum incentive of $15,000. Because of the 40% limit, a home installing $30,000 worth of solar and storage could get a maximum incentive of $12,000.
Black Hills Energy Performance-Based Incentive
Black Hills Energy, an electric utility, offers its customers with solar + storage installations a performance-based incentive, meaning payment is based on how much energy is produced by the solar system. The incentive varies depending on the size of the system and whether a customer is income-qualified. For 0.5 kW – 25 kW systems, homeowners can receive $0.0025 per kWh produced annually, and a one-time $100/kW for storage, up to $1,000.
If a solar system were to produce 10,000 kWh annually, this Colorado solar incentive would pay that homeowner $25 annually.
San Miguel Power Association Renewable Energy Rebate
The San Miguel Power Association offers a solar rebate for customers of $0.10 per watt up to $300. Commercial systems can receive up to $1,000, and small wind energy projects can also receive $300. While not a large incentive, any additional amount helps reduce the burden on homeowners making the switch to go solar.
Denver Switch Together Program
Denver offers a program called Switch Together, a program aimed at making solar more affordable for low-income families. For those who would qualify, the Switch Together program provides $8,000 rebates. Systems cannot exceed 7 kW in size or 110% of the home’s 12-month electricity usage.
Denver Climate Action Rebate Program
Denver offers rebates to homeowners who install energy-efficient appliances, electric vehicle chargers, main panel upgrades, solar, and energy storage. Through the Climate Action Rebate program, homeowners in Denver looking to go solar can apply for a solar rebate of $1 per watt up to $2,000. If income-qualified, additional funding is available.
If a home is installing battery storage as well, the program also offers a $500 rebate. Homeowners can receive up to $2,750 for their energy storage rebate if they already have a heat pump, heat pump water heater, or bi-directional EV charger. As of March 26th, 2025, the program funds have been fully allocated for 2025.
Mountain Parks Electric Clean Power Program
Mountain Parks Electric, an electric utility, offers a $500 rebate to customers in its service territory who install solar. Residential systems must be at least 2 kW in size and no larger than 25 kW.
Net Metering
The Colorado Public Utilities Commission adopted standards for net metering in Colorado in 2005 and applied those standards to Municipal Utilities and Electric Cooperatives in 2008. Solar homeowners in Colorado receive a kWh-for-kWh credit for any excess generation they send back to the grid, as long as their system is not sized over 200% of their average annual consumption.
This means that a solar home in Colorado that sends 10 kWh back to the grid on any given day will have 10 kWh of credit applied to their bill to offset future energy consumption. That’s a great benefit and allows Colorado solar homeowners to benefit from all of their production, whether they include energy storage or not.
Colorado’s energy rates over the last 10 years have increased by 28%, with rate increases since 2020 jumping substantially, so receiving a true 1:1 credit is a huge incentive for Colorado residents.
The Future of Solar In Colorado
With the end of the Federal Solar Tax credit potentially looming, states with local solar incentives and strong net metering policies, like Colorado, will become major hubs for the solar industry going forward. While much of Colorado’s solar growth has been in the utility-scale sector, the state still offers a strong value for residential solar homeowners and will likely see significant residential growth in the future.
Homeowners in Colorado going solar should make sure to fully research their solar options and choose a contractor that is a Solar Insure Certified Provider so they can receive 30-year equipment and labor cost protection from SI-30 Warranties. Learn more about SI-30 warranties here: https://www.solarinsure.com/monitoring-warranty
If you’re a Florida solar homeowner whose installer unfortunately went out of business, you can still receive long-term coverage with SolarDetect. SolarDetect by Solar Insure is a monitoring and maintenance plan for homeowners without reliable solar maintenance providers. Learn more about SolarDetect at https://www.solarinsure.com/solar-insure-monitoring-and-warranty-service