Colorado solar rebates and incentives: 2024 guide

The average Colorado solar shopper will save $4,617 from the federal tax credit alone. Colorado's other rebates and incentives bring down the cost of solar even further.

Updated Apr 4, 2024

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    Written by: Emily Walker

    Solar panels are a great investment for Colorado residents, thanks to a rock-solid net metering policy and lots of local and utility level incentives—not to mention the big federal clean energy tax credit. You can easily save thousands on the upfront costs of going solar, and thousands more on the cost of electricity over time.

    See how much solar costs in Colorado

    As a Colorado homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The three below are some of the most impactful ways to bring down your solar costs.

    Incentive
    Average savings in Colorado
    Description

    Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)

    $4,617

    Lowers your solar panel system's cost by 30%

    Colorado Residential Energy Upgrade (RENU) Loan

    Varies depending on how you finance your system

    Provides 20-year, low-interesting financing up to $75,000 for home energy upgrades including solar panels

    Local incentives & rebates

    Up to $7,000 for solar

    Depending on your utility company and where you live, additional incentives may lower your system's cost

    Residential Clean Energy Credit

    The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

    The average cost for a 5 kW solar panel system is around $15,391 in Colorado. Once you factor in the 30% credit, the cost comes down to $10,774.

    When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

    You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

    RENU Loan

    Colorado's Residential Energy Upgrade (RENU) Loan offers solar financing at rates that match or slightly beat the market average, don’t require collateral (like a home equity loan), and don’t come with any hidden fees. 

    As long as you own your home and don't have a shared heating or cooling system with another home, you're eligible for a loan up to $75,000 with a repayment period of up to 20 years. Your rate will depend on your credit score, and which eligible credit union you choose to work with. You won't owe anything upfront and the loan will have a fixed monthly payment for the duration, with no prepayment penalty. It’s backed by the Colorado Clean Energy Fund, a not-for-profit with ties to the Colorado state government.

    Local incentives & rebates

    Loads of electric companies and local governments around Colorado offer extra incentives when you install solar panels:

    Depending on where you live, you may be eligible for incentives if you sign a contract through High Country Conservation Center's Solarize Summit program. If you live in Breckenridge or Silverthorn County, you can earn $1,650 and if you live in Summit County or the Town of Frisco, you can earn $1,500. The program's installer, Active Energies solar, also provides a 5% discount, up to $1,500, to program participants. However, incentives are only available until June 30, 2024.

    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.

    Tax exemption
    Description

    Colorado solar sales tax exemption

    You don't need to pay any sales tax on new solar panel systems in Colorado, saving at least 2.9% of your system costs.

    Colorado solar property tax exemption

    If you use solar energy as a source of power, you won't need to pay tax on the value your solar panels add to your property. Colorado’s average property tax is 0.6%

    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:

    Xcel Energy Black Hills Energy

    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 $500 per kW (not kWh—an important difference), up to 50% of your battery equipment (not installation) cost. 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. The program may or may not be discontinued in 2025, and it’s unclear how this would affect the annual bonus.

    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 25 kW. If you instead enroll in the Time of Day Tariff, you can earn $250/kW up to 25 kW. 

    All batteries above 3 kWh are also eligible for the 30% federal tax credit.

    See the complete list of solar companies in Colorado

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