Colorado Solar Incentives
With the latest advancements in solar technology, more affordable solar system prices, and attractive new incentives, there’s never been a better time to capitalize on Colorado’s solar potential. We’ve compiled some of the most beneficial solar incentives available to Colorado homeowners below.
From now until 2032, the federal government is offering a 30% investment tax credit against the total cost of a home solar system. It’s one of the best incentives the federal government has ever offered in way of a solar tax credit.
How it works:
If you buy your solar system outright, you can apply 30% of the total cost of your solar system installation to your tax liability for the year.
For example, if you purchase a solar panel system that’s worth 20,000, you can get a credit of 6,000 on your federal taxes.
Keep in mind, this is not a cash rebate — it’s a tax credit.
Starting in 2033, the value of the tax credit will lower to 26%. After 2034, the tax credit for residential solar systems will end.
Local Solar Battery Rebates
In Colorado, some utility companies and other local organizations offer cash rebates to homeowners who install solar systems on their property.
- Xcel Battery Rebate: Xcel Energy is offering a 5000,500 rebate per Powerwall plus 100/year (up to five years) for opting into their virtual power plan. This is in addition to the 30% federal tax credit.
- Tesla Powerwall Rebate: To celebrate the global milestone of 500,000 Powerwalls installed, Tesla is offering a 500 rebate on any Powerwall 2 or Powerwall commissioned through October 31, 2023. To get the rebate, the customer will submit directly within the Tesla app once their battery is commissioned and monitoring is set up. This rebate is direct from Tesla and is handled within the Tesla App during the rebate period.
- Colorado State Tax Credit: Colorado is offering a 10% tax credit available on eligible Powerwall equipment. This tax credit is available through the DR-1307 form.
- Energy Smart Colorado: Depending on your home’s location, they offer rebates for solar installations ranging from 400 to 3,000.
- Holy Cross Energy: To reduce the cost of solar system installations, Holy Cross offers customers a per-kilowatt (kW) rebate of 750 for the first 6 kW. Homeowners with an average 6 kW system can save up to 4,500 on installation costs.
- Black Hills Energy: As part of their “ Ready EV” program, Black Hills Energy is now offering a 500 credit towards electric vehicle chargers for your home or business. See their website for more details.
- Speak with one of our solar professionals at (720) 370‑3344 to learn more about available solar rebates in your area.
Colorado State Sales Tax Exemption
With Colorado’s sales tax exemption, homeowners who install solar energy systems are not taxed on their system components, which can save hundreds of dollars.
How it works:
Residential solar power system components are not taxed in Colorado. The exemption only applies to sales and use taxes imposed by the states, not those imposed by incorporated towns, cities and counties.
Some of the eligible components include:
- Turbine generators
- Rotors and blades
- Solar modules and trackers
- Supporting structures or racks
- Inverters
- Balance of system components
- …and more
Some of the ineligible components include:
- Step-transformers at the production site
- Energy storage
- Remote monitoring systems
Note: The sales tax exemption does not include labor.
How to Go Solar
There are many options to choose from to power your home with renewables.
Choosing to go solar is a great way to help solve the climate crisis. There are lots of options for you to consider.
Which Type of Solar is Right for Me?
Traditional rooftop and ground-mounted solar systems are best for residents open to purchasing and owning solar panels. These systems can have higher upfront costs, and maintenance usually is up to the owners.
Former Mayor Suzanne Jones Checks out a rooftop solar installation in Boulder
Shares in a Solar Garden
In Colorado, Xcel Energy customers have access to community solar gardens. These often provide similar bill credits to roof-top or ground-mount systems, but don’t require roof space on your home. This is a great option for people who rent, live in multi-family buildings or who don’t want to own solar.
A team of residents install a solar garden north of Boulder
Utilities
All utilities in Minnesota are required to have net metering. In the Gopher State, net metering policies allow a homeowner to receive full retail credit for any excess kWh’s produced by their solar system. Projects are capped at 40 kW, but most homeowners will fall way below this system size anyway.
Xcel, the state’s largest utility, has a Solar Rewards program for its customers looking to install a PV system. Homeowners can earn 8 cents per kWh that their system produces through the program.
To participate, they must not receive incentives through the Made in Minnesota program (more on this later) and must assign the renewable energy credits (RECS) their system produces to their utilities for the next 10 years.
Minnesota Power has an incentive program that allows solar customers to get paid out up to 94 cents per kWh their system produces. The SolarSense program is first to come first serve, and can not exceed 20,000 or 60% of the total system cost.
Otter Tail Power offers a solar incentive program to its customers for 450,250 per kilowatt of their system, not exceeding 50% of the system costs. For a 5kW system, that’s 6,250 off the cost of a system for a homeowner!
Beyond the investor-owned utilities, most public utilities in Minnesota have incentive programs for solar customers as well. Below is a list:
- Owatonna Public Utilities – 50 per installed watt (500 per kW) of solar up to 10 kW systems.
- Rochester Public Utilities – 50 per installed watt (500 per kW) of solar up to 10 kW systems.
- Austin Utilities – 50 per installed watt (500 per kW) of solar up to 10 kW systems
- Brainerd Public Utilities – Rebates at 5000/watt installed, up to 4,000; systems limited to
- Moorhead Public Service Utility – Up to 450,500 per kW installed
- New Ulm Public Utilities – 450 per watt, for new systems up to 40 kW, capped at 5000,000 per project.
- Dakota Electric – Rebate of 50 per watt for installed capacity, Does not exceed 4,000
Made in Minnesota
If you are a homeowner in one of the big three investor-owned utilities (Xcel, Minnesota Power, and Otter Tail Power) who purchases solar equipment made in Minnesota, you can also qualify for the Made in Minnesota (MiM) solar incentive.
The incentive is performance-based, and the incentive amounts vary based on the type of solar system and size. Applicants are selected through a lottery process, and residential homeowners can earn up to.14 cents to.27 cents per kWh the system produces. They are paid out annually each year for the next 10 years.
The Federal Solar Tax Credit (Federal ITC)
After rebates and incentives are calculated, homeowners can claim the Federal Solar Tax credit on their system. The ITC covers 30% of the overall system cost and includes upgrades needed on their home in order to go solar. Check this video to know more about Federal Solar Tax Credit.
For Minnesotans, now is the perfect time to take advantage of all these incentives and go solar!
Why over 10,000 Colorado homeowners have chosen ION as their solar provider
Learn what makes us different why 10,000 Colorado homeowners have chosen ION.
ION handles everything for you – from financing and design to permits and installation – all you have to do is provide a power bill sign the papers.
Full-service customer support before, during after installation
With ION, you get a dedicated project coordinator, weekly check-ins, as well as fast friendly support via phone, email, and live chat.
Have a question aboutswitching to solar in Colorado?
Check out the FAQ’s below for more information or book a free, no-obligation QA call with our team.
Solar panels are made of special cells (PV or photovoltaic cells) that absorb sunlight and produce an electrical current.In order for your home to use that electrical current (known as DC or Direct Current), it must be converted into AC (or Alternating Current), which is done through micro inverters that are attached to each solar panel.
Once the energy has been converted, it runs through your electrical panel, gets distributed within your home, and can be used to power your appliances, lights, and more.
The following solar tax credits and incentives are available in Colorado. To find out if you’re eligible, we recommend contacting our team for more information and speaking with a tax professional who can help.
Colorado residents with high energy burdens can apply to the Weatherization Assistance Program (WAP) for financial help with installing a rooftop solar system (for many, this could mean a free solar system). Eligible households include those paying more than 4% of household income on energy costs (Source: energyoffice.colorado.gov).
The Solar Investment Tax Credit (ITC) is a federal tax credit for those who purchase solar energy systems for residential, commercial or utility scale properties. Through this legislation, all solar systems installed between 2022 and 2023 are eligible for a federal tax credit. If you qualify, you could reduce the cost of your system by up to 30% (Source: Energy.gov).
Colorado offers a sales tax exemption on your solar system. The exemption does not include labor, energy storage devices, or remote monitoring systems (Source: tax.colorado.gov).
Colorado excludes the added value of a solar panel system from a home’s value in Colorado; in other words, your property taxes will not increase due to the value your solar system adds to your home (Source: Database of State Incentives for Renewables Efficiency).
In Colorado, utility companies are required to pay you (typically in the form of bill credits) at the market rate for excess energy your system produces throughout the year (up to 120% of their electricity demand for Investor Owned Utilities (e.g. Xcel Energy and Black Hills) or capped at 10 kilowatts for residential for municipal (e.g. Fort Collins) and cooperative utilities (e.g. electric cooperatives who purchase wholesale power from Tri-State or other power providers).
XCEL customers in Colorado have the option to participate in incentivized offerings based on customer type and AC system size. Renewable Energy Credits (REC) incentives are paid to the system owner in cents per kilowatt hour (¢ per kWh).
If you choose to participate, monthly or annual payments are made to the owner of the solar system in exchange for Renewable Energy Credits (RECs) for the energy produced by the solar system (Source: Xcel Energy).
Depending on where you live, additional incentives and rebates may be offered by your town/city and/or by your utility company. To find out what’s available and if you’re eligible, contact your local government and utility companies or reach out to the ION team who can point you in the right direction.
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Actual savings will vary depending on system production, geography, weather, shade, electricity usage, utility rates, rate increases, and financing options. Savings estimated here assumes utility rate increases annually and stable customer utility usage rates. Contact us to receive a detailed proposal based on your home and energy usage.