Colorado Solar Incentives, Cost & Payback (2026)
Written by Aditya Patil · Last updated 2026-09-24
Colorado remains one of the best states for rooftop solar thanks to its excellent sun exposure and robust retail net metering policies for major utilities like Xcel Energy. Unlike states that have slashed export rates, Colorado homeowners can still get full retail value for the solar power they send to the grid.
$129
Avg. monthly bill
17.13¢/kWh
Avg. rate
$4.7/W
Real installed cost
LBNL Tracking the Sun
15 yrs
Est. payback
typical household
Cost of solar in Colorado
According to the latest residential installation data from LBNL's Tracking the Sun report, the real median installed cost for solar in Colorado is $4.7/watt. A typical home in the state installs a 6.8 kW system at a gross cost of roughly $31,082 before accounting for incentives.
For a household consuming Colorado's average 9,018 kWh per year, you would need an estimated 5.44 kW system. Based on the median price per watt, that comes out to about $25,589 gross. Assuming a cash purchase in 2026 (when the federal 25D credit no longer applies), your net cost would be $25,589.
Solar only
Benefiting from full retail net metering for investor-owned utilities
$1,545 / yr savings
15-year payback · $52,664 over 25 years
Solar + battery
Leverages the 10% state battery tax credit and Xcel's VPP programs
$1,545 / yr savings
15-year payback · $52,664 over 25 years
Colorado rebates & incentives
Colorado has great local incentives, particularly for low-income households and for those adding battery storage.
| Program | Amount | Status |
|---|---|---|
| Residential Energy Storage System Income Tax Credit | 10% of the purchase price of a residential battery/energy storage system, with no dollar cap stated in the statute. Claimed on Colorado form DR 1307, or can be assigned to the seller (e.g. the installer) for an upfront discount instead. | open |
| Xcel Energy Solar*Rewards — Income-Qualified / Disproportionately Impacted Community incentive | $1.00 per watt of installed on-site solar, up to 7 kW, as an additional incentive on top of standard Solar*Rewards enrollment and net metering. | open |
| Xcel Energy Renewable Battery Connect | Reported by multiple installer/VPP-tracking sources as an upfront rebate of about $350 per kW of battery discharge capacity (up to $5,000 per household), plus a $100 bill credit per year for 5 years ($500 total) for allowing Xcel to dispatch the battery; an enhanced ~$800/kW rate is reported for income-qualified/Disproportionately Impacted Community customers. Figures could not be confirmed against Xcel's live program page in September 2026 — verify current amounts at the program URL before acting on these numbers. | open |
| Colorado RENU Loan | Low, fixed-rate financing up to $75,000 for home energy upgrades including solar and solar batteries, with terms up to 20 years for solar/battery projects (up to 15 years for other efficiency upgrades). No prepayment penalty. | open |
Net metering rules
Under Colorado PUC regulations, investor-owned utilities like Xcel Energy and Black Hills Energy must offer full retail net metering for systems sized up to 120% of a home's annual electricity usage. This means that for every kilowatt-hour you send to the grid, you get a dollar-for-dollar credit against the electricity you consume later.
These credits carry over from month to month. At the end of an annual billing cycle, any remaining credit is typically paid out at a wholesale rate, which is a fraction of the retail price. However, Xcel Energy customers can opt for "Continuous Rollover," permanently carrying over their dollar credits to offset future bills without facing the wholesale true-up.
| Policy | Full Retail Rate Net Metering (for investor-owned utilities) |
| System size limit | Up to 120% of average annual consumption |
| Export credited at | Full retail rate (dollar-for-dollar offset on bills) |
| Monthly rollover | Yes, credits roll over month-to-month |
| Year-end true-up | Paid out at incremental cost (low) OR Continuous Rollover (Xcel only) |
| Co-ops and Municipals | Not bound by PUC rules; terms vary |
Within the annual cycle, exported kWh are credited at the full retail rate (base energy rate plus riders). If a customer has not elected Xcel's permanent 'Continuous Rollover' option, any credit balance left at year-end is instead paid out at the 'average hourly incremental cost of electricity' (AHIC) — historically about 1.3–2.6 cents/kWh, far below the retail rate — rather than carried forward. Rates and the true-up mechanic can vary for municipal/co-op utilities, which are outside PUC jurisdiction.
Batteries & VPP programs
Colorado is highly proactive about incentivizing home battery storage. Between the state's 10% income tax credit for energy storage systems and virtual power plant (VPP) programs, buying a battery here makes strong financial sense.
Virtual Power Plants (VPPs)
Xcel Energy Renewable Battery Connect
Xcel Energy's residential virtual power plant / demand-flexibility program for Colorado. Enrolled home batteries can be remotely dispatched by Xcel (via the battery's software 'Operator') for grid-support events, in exchange for an upfront rebate plus annual bill credits. See the co-xcel-renewable-battery-connect incentive entry for reported dollar figures (not independently confirmed against Xcel's live page in this research pass).
Battery Incentives
Xcel Energy Renewable Battery Connect
Upfront rebate plus ongoing bill credits for Xcel Energy Colorado residential customers who let Xcel dispatch their home battery for grid support; higher rebate tier reported for income-qualified/Disproportionately Impacted Community customers. Program budget reopened May 21, 2026 after a temporary closure earlier in the year; enrollment and exact current incentive levels should be confirmed directly with Xcel before publishing specific figures.
Residential Energy Storage System Income Tax Credit
Colorado's own 10%-of-purchase-price state income tax credit for home batteries (C.R.S. 39-22-546), separate from and unaffected by the federal 25D credit's Dec 31, 2025 expiration. Claimed on form DR 1307 or assignable to the seller for an upfront discount. See the co-residential-energy-storage-tax-credit incentive entry for a caveat on the exact current sunset year.
Top utility providers
Investor-owned utilities follow PUC net metering guidelines, whereas municipal utilities and co-ops set their own policies.
| Utility | Residential rate | Customers |
|---|---|---|
| Public Service Co of Colorado | 15.05¢/kWh | 1,365,053 |
| City of Colorado Springs - (CO) | 14.45¢/kWh | 216,771 |
| CORE Electric Cooperative | 15.04¢/kWh | 165,067 |
Estimate your own numbers
The figures on this page reflect a household with average electricity usage in Colorado. For a personalized estimate, input your own bill data into our solar calculator.
FAQ
Are there any state tax credits for solar in Colorado?
Colorado does not offer a state income tax credit for the solar panels themselves, but it does offer a 10% income tax credit for residential energy storage systems (batteries). Additionally, there is a 100% property tax exemption on the added home value from your solar panels, and a state sales tax exemption on the purchase of renewable energy equipment.
How does net metering work with Xcel Energy in Colorado?
Xcel Energy offers full retail net metering for systems sized up to 120% of your historical electricity usage. When you produce more power than you use, you earn a dollar-for-dollar credit at the full retail rate. At the end of the 12-month billing cycle, you can either get paid out at a very low wholesale rate, or you can opt into "Continuous Rollover" to keep those credits forever to offset future bills.
Is a solar battery worth it in Colorado?
Because Xcel provides 1-to-1 retail net metering, a battery isn't strictly necessary for financial payback the way it is in California. However, Xcel's Renewable Battery Connect program provides upfront rebates and annual bill credits if you allow them to dispatch your battery during high-demand events. Combined with the 10% state battery tax credit, this makes storage much more attractive for backup power and grid support.
Data sources
Last updated 2026-09-24
- U.S. Energy Information Administration — Electricity Data Browser — accessed 2026-09-24
- NREL PVWatts — accessed 2026-09-24
- NREL Solar Resource Data — accessed 2026-09-24
- LBNL Tracking the Sun (public data file, host-owned residential systems) — accessed 2026-09-24
Written by Aditya Patil