Colorado Solar Rebates, Incentives and Tax Credits

Colorado is definitely one of the more progressive states out there when it comes to renewable energy generation. In 2004, Colorado passed a ballot initiative creating a state-wide Renewable Energy Portfolio Standard (RPS) that has paved the way for the expansion of the Colorado solar industry. Recent Amendments now require Xcel Energy and the State’s other investor owned utilities to generate at least 4% of their renewable energy from solar. In addition, at least 2% of that power has to come from Xcel customers as opposed to a huge commercial solar farm.


Let’s take a look at the reasons why installing a Colorado home solar power system makes good sense.


Net-metering  With net-metering, customers receive credits for any additional power their solar panels produce during the day. At night or on cloudy days, customers can use these credits to power their homes. Colorado is also one of the few States that requires utilities to pay you for the net excess solar power that your panels produce over the course of a year. This means if you reduce your electric usage during the year and have solar, the utility has to cut you a check at the end of the year for any extra solar power you’ve produced an put onto the grid.


PACE Financing for Solar – PACE stands for Property Assessed Clean Energy and is another way to finance your home solar system. With PACE, the upfront solar cost is paid for with a special property tax assessment. Each year, for 20 years, you pay slightly higher property tax. Even if you end up moving there is no problem, the payments (and savings) get transferred to the new owner. There is usually limited funding for these programs and unfortunately they tend to sell out quickly. If you want to find out more contact us and we can have a solar expert inform you about the latest financing offerings available to you.

Residential Solar Incentives

Solar rebates in Colorado vary depending on the utility.

Click on your utility below to see what they are offering.

Xcel Energy

Black Hills Energy

Colorado Springs Utility

Holy Cross Energy

La Plata

Southeast Colorado Power Association



Let’s take Xcel Energy as an example. With Excel you will receive $2/watt. In addition to the rebate, utilities must also pay you an upfront payment for your Solar Renewable Energy Credits (S-RECs or RECs). RECs are confusing at best but basically it means that the utility is will pay you additional money for your solar energy generating potential. Currently this will equate to an extra $0.55/watt which makes the total upfront solar rebate $2.55/watt. Please note that this will decrease as more residential solar comes online so the longer you wait the more you will pay out of pocket.

LocationDenver, CO
Av. Monthly Electricity Bill$110
System Size7.0 kW
% Reduction in Electricity Bill90
Cost / Watt (installed)$6.50
Cost Breakdown
Total Cost$45,500
CO State Rebate (including REC value)$17,850
Federal Tax Incentive (calculated after state rebate)$8,295
NET COST$19,355
Payback period12 years
Cash Flow
New Av. Monthly Electric Bill$11.74
Monthly Loan Payment$136.80 (25yr, 7%, 0 down)
Tax Saving$43.26*
Cumulative Lifetime Savings$57,343 over 25 years
Environmental Benefits
CO2 Emissions Saved 9,586 lbs/year
Trees Planted 0.8 acres

* Tax savings will decrease as the principal is paid down. Please consult your tax preparer.


One Big Reason to Consider

Take a look at the chart below. This is what the price of Colorado electricity has been since 2002 and if electricity rates increase at a rate of 5.5% for the next 20 years, in 2030 Colorado residents will be paying $0.39 kWh for electricity. That means if your current electric bill is around $130/month for 12,000kWh of annual usage, it would be close to an average $390/month in 2030. In the past 10 years, utility rates in Colorado have been increasing at 9% per year.