Colorado solar rebates and incentives: 2026 guide

Solar panels might seem expensive, but if you live in Colorado, you're in luck. Your state offers some of the most generous solar incentives in the country, helping thousands of homeowners shrink their upfront costs while locking in decades of lower electricity bills. There are multiple ways to bring down the price of going solar—and start saving sooner than you might think.

Even better? The long-term savings from reduced electricity costs typically outweigh your upfront investment. Here's how to take advantage of Colorado's solar incentives.

Incentives help bring solar's price tag down considerably in Colorado. Here are the major ones to know about:

In addition to the great rebates and incentives above, Colorado also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system, while the solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

If you connect your solar panel system to the grid, you can benefit from net metering—which is really the ultimate incentive for rooftop solar, even more than big rebates and tax credits. 

Under net metering, the sun doesn’t need to shine all the time to get massive value from your solar panels. Your electric utility company works like a bank account for all the energy your panels produce in any given month.

When the sun shines, your home’s electrical system first takes as much power as it needs from the solar panels. If the panels make any excess energy, it gets sent back onto the grid, and your utility company gives you full credit for all of it on your energy bill. 

When the sun isn’t shining and you need grid electricity to power your home, the utility company just starts drawing against your credits. You won’t pay for electricity until those credits run out.

A few nuances to keep in mind:

• Credits roll over from month to month. Depending on your utility company and your plan, the excess credits will either be paid out in cash at the end of a calendar year, or rolled forward indefinitely. 

• Different utility companies have slightly different crediting rules. Xcel Energy gives you a choice between dollar-based credits, or kWh-based credits. If you choose to convert your energy credits to dollars, they can roll forward indefinitely, and you can use that credit toward your connection fee—the flat charge you pay each month for being an Xcel customer. If you choose a kWh-based credit, they’ll settle up any leftover credits at the end of the calendar year and send you a check for a couple cents per kWh—aka the “average hourly incremental cost,” well below the retail rate you pay them per kWh, unfortunately. Black Hills Energy only offers kWh-based credits, though the payout rate at the end of the year is more generous than Xcel’s. 

• Smaller utility companies have slightly different rules. Utilities with fewer than 5,000 customers aren’t obligated to offer net metering at all, while municipal or co-op utilities have a 10 kW cap on the maximum system size for eligible solar setups.

More on Colorado's biggest net metering programs at the links below:

In Colorado, solar batteries make the most sense as a backup power system for peace of mind. Given the strong net metering program and generally low prices for electricity, you shouldn’t expect a return on investment if you install a solar battery in Colorado. But it’s a solid option to consider instead of a backup gas generator, for example, and some of Colorado’s electric utilities offer big incentives.

Xcel Energy customers who enroll in the Renewable Battery Connect program can receive an upfront incentive worth $350 per kW (not kWh—an important difference), up to $5,000 per application. Eligible batteries include the Tesla Powerwall 2, Tesla Powerwall +, Tesla Powerwall 3, and SolarEdge Home Battery. 

(If you're an income-qualified customer or you live in a disproportionately impacted community, you can earn $800/kW, up to 75% of the equipment cost.) 

Customers who remain enrolled in the program can earn $100 annually for up to 5 years. As of January 2025, 94% of the allocated funds are still available.

The catch is that you won’t have full control over your battery. By remaining enrolled, you agree to allow Xcel Energy to use up to 60% of your battery during control events, up to 60 times each year for five years. So it’s possible that your battery might only be charged up to 40% of its capacity at the beginning of a blackout. The good news is that technically, if you find that Xcel’s “control events” are a burden, you can un-enroll at any time without a penalty or clawback payment.  

For Holy Cross Energy customers who install a solar battery and enroll in the Distribution Flexibility Program Tariff (a specific electric rate plan), there’s an upfront incentive of $500/kW up to $12,500. If you instead enroll in the Time of Day Tariff, you can earn $250/kW or $100/kWh up to $12.500. You can only enroll in one of Holy Cross’ battery storage incentive programs.