Colorado’s Key Solar Incentives: A Breakdown

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As Colorado continues to embrace renewable energy solutions, solar power has emerged as a crucial component of the state’s strategy to promote sustainability and reduce carbon emissions. For homeowners and businesses looking to invest in solar energy, understanding the available incentives is essential to maximize the financial benefits of going solar. Colorado offers a range of key solar incentives designed to make solar installations more affordable and attractive. This article provides a comprehensive breakdown of these incentives, including state and federal tax credits, rebates, and other financial mechanisms that can significantly reduce the cost of solar panel systems. By exploring these opportunities, Colorado residents and businesses can make informed decisions about their solar investments and take full advantage of the financial support available to them.

Residential Clean Energy Credit

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

When filing your federal income taxes, you can claim this credit towards your federal tax bill. To qualify for the ITC, you must purchase your system with cash or through a solar loan; leasing the system does not make you eligible.

Additionally, you must have a sufficient tax liability, though any unused credit can be rolled over year-to-year until the ITC expires at the end of 2034. The only exception for direct payment eligibility is for tax-exempt entities, such as nonprofit organizations.

Solar for All

• The Community Power Coalition (CPC)’s SFA program, “Powering America Together,” will collaborate with and enhance the impact of the US Department of Energy’s National Community Solar Partnership and Community Power Accelerator program. Led by Inclusive Prosperity Capital, Inc., CPC comprises seasoned community solar experts who have contributed to the Community Power Accelerator as developers, lenders, trainers, and technical assistance providers. The program aims to support the development of low-income community solar projects, reduce carbon emissions, lower energy costs, and promote quality jobs, community wealth-building, energy resilience, and equitable workforce development. 

• The Colorado Solar for All (COS4A) program is set to offer single-family rooftop solar and multifamily rooftop solar installations across the entire state. Representing a diverse range of stakeholders, with the Colorado Energy Office (CEO) taking the lead, the COS4A program is poised to extend the benefits of solar energy to low-income and disadvantaged communities. Supported by the EPA’s Solar for All (SFA) grant, this initiative will complement Colorado’s thriving solar market by expanding access to distributed solar investments and making affordable, resilient, and clean solar energy accessible to a broader range of communities. 

• Grid Alternatives’ Western Indigenous Network Solar For All (WIN-SFA) program draws on its extensive experience in working with Tribal communities, aiming to maximize benefits for Tribal households and advance energy sovereignty while addressing environmental degradation and climate change. Through the provision of financial assistance in the form of grants and incentives, coupled with technical support from organizations with expertise in equitable deployment of renewable energy in Tribal settings, WIN-SFA seeks to bring solar power to thousands of Native American households nationwide.

• Teaming up with lead applicant GRID Alternatives, a coalition of ten mission-driven nonprofit solar and affordable housing providers and allies has collaborated to develop the Solar Access for Nationwide Affordable Housing Program (SANAH). SANAH is meticulously crafted to maximize benefits for households and communities while advancing equity, reducing harmful pollution, and combating climate change. The program offers a multitude of advantages, including expanded access to solar and storage for income-qualified households, significant energy savings and relief from burdensome costs, as well as additional benefits like efficiency improvements and electrification. 

Solar Sales Tax Exemption 

Colorado provides a comprehensive exemption from the state’s sales and use tax for all transactions involving components used in the generation of alternating current electricity from renewable energy sources. This exemption applies to the sale, storage, and use of such components, facilitating the development and expansion of renewable energy infrastructure within the state. By removing tax barriers on essential components, Colorado aims to incentivize investments in renewable energy projects, support clean energy innovation, and contribute to the state’s goals of reducing carbon emissions and promoting sustainability.

Solar Property Tax Exemption

In Colorado, renewable energy personal property situated on residentially classified property, owned by the residential property owner, and used to generate energy for that property is exempt from property taxation. This exemption encourages homeowners to invest in renewable energy systems such as solar panels or wind turbines without facing additional property tax burdens. By exempting these systems from taxation, Colorado aims to promote the adoption of renewable energy technologies at the residential level, reduce energy costs for homeowners, and support sustainable energy practices within communities across the state. This initiative aligns with broader efforts to enhance energy independence, reduce environmental impact, and foster a cleaner energy future for Colorado residents.

The Colorado RENU Loan 

The Colorado RENU loan is a statewide residential loan program sponsored by the Colorado Energy Office in partnership with Colorado-based credit unions. It makes home energy upgrades easy and affordable by offering low-cost, long-term financing for energy efficiency and renewable energy improvements.

Weatherization Assistance Program

The U.S. Department of Energy’s Weatherization Assistance Program (WAP) offers grants to improve energy efficiency in low-income homes. States, territories, and some Indian tribes receive these grants and contract local governments and nonprofits to provide weatherization services using the latest technologies. To qualify in Colorado, you must be a resident. Preference may be given to those over 60, families with disabled members, and families with children. If you receive Supplemental Security Income (SSI) or Temporary Assistance to Needy Families (TANF), you are automatically eligible.

Colorado Springs Utilities’ Net Metering Program

Colorado Springs Utilities’ net metering program allows customers with renewable energy systems, such as solar panels, to receive credits for excess electricity sent back to the grid. Customers are billed for their net energy usage, which is the difference between the energy they consume and the energy their system produces. This program supports both residential and commercial customers and encourages the adoption of renewable energy by providing financial incentives.

Energy Smart Colorado Renewable Energy Rebate

Eligibility for Rebates:

– Income-Qualified Rebates: Households with annual incomes up to 160% of Area Median Income (AMI) can receive rebates up to $4,000 per year ($10,000 for bonus heat pump rebates). Proof of full-time residency in Summit County is required.

– Regular Rebates: Households earning more than 160% of AMI can qualify for rebates up to $1,000 per year ($2,000 for heat pumps and $1,500 for solar PV). Renters may participate with landlord approval.

The Solar Rebate Ordinance of the City of Boulder

The Solar Rebate Ordinance of the City of Boulder established in 2008, offers a rebate of around 15 percent of the city sales and use tax paid on materials and permits for solar installation.

Eligibility:

Taxpayers are eligible if they submit a rebate application within 12 months of the city’s final inspection.

Solarize Summit

2024 Solarize Summit is Closed

Breckenridge, Frisco, Silverthorne, and Summit County have a limited number of rebates for residents who sign contracts through the Solarize Summit program. Active Energies Solar – the program’s installer – also provides a 5% discount up to a maximum of $1,500 to all program participants.

 Local rebates are available to residents of Breckenridge, Frisco, Silverthorne and unincorporated Summit County on a first-come, first-served basis. In 2024, Breckenridge, Silverthorne and Summit County Government rebates are $1,650. Town of Frisco rebates are $2,400. 

Xcel Energy’s Solar*Rewards Program

Xcel Energy’s Solar*Rewards provides incentives for customers who install grid-connected photovoltaic (PV) systems sized up to 120% of the average annual load of their homes and facilities. Xcel purchases the renewable energy credits (RECs) produced by the systems for a period of 20 years (unless other legal provision supersedes). The size of the REC payment depends on the size of the system and the owner of the system.

Income-Qualified On-Site Solar Program (0 – 7 kW) – Standard Offer:

– Offers $1/W for eligible systems.

– Performance payment set at $0.00/kWh.

– Annual capacity limit: 0.5 MW.

Commercial & Industrial Program (8 kW – 1 MW) – Standard Offer:

– Offers performance payments based on system size.

– Systems between 8 – 250 kW: $0.04/kWh.

– Systems between 250.1 – 500 kW: $0.0375/kWh.

– Systems between 500.1 kW – 1 MW: $0.035/kWh.

– Up to 15 MW of capacity approved annually.

– Upfront adder of $0.15/W for projects serving income-qualified customers or disproportionately impacted communities; annual budget: $700,000.

Large Program (1 MW – 200% of annual consumption) – Competitive Bid:

– Offers up to $1 million in estimated annual REC incentives for 2023, or up to $4 million over the 2022-2024 Renewable Energy Plan timeline.

Net Metering:

– Available for Xcel Energy’s customers.

– Net excess generation (NEG) credited to the next month’s bill.

– NEG at year-end compensated at utility’s avoided-cost rate or carried forward indefinitely as a kilowatt-hour credit with customer election.

Disclaimer

The information provided herein is for informational purposes only and is accurate as of the time of publication. Please be aware that the solar energy landscape, including technology, regulations, incentives, and market conditions, changes frequently. Therefore, it is essential to consult with qualified experts and professionals before making any decisions regarding solar energy installations or investments. This will ensure that you receive the most current and applicable advice tailored to your specific circumstances.