Is solar worth it in Colorado in 2026?

How Colorado pays for your solar power

Net metering at the retail rate. Xcel Energy and other investor-owned utilities in Colorado credit rooftop solar exports at the retail energy rate; the PUC kept this in place in 2015 and SB21-261 widened it in 2021.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 100% of retail (our default for this kind of rule), so each solar kWh is worth 100% of the retail price on average. Change it if your utility pays more or less. Method

State or utility incentive	What it is worth
State sales and use tax exemption for solar components	Solar modules, racks and inverters exempt from state sales tax (batteries and labor excluded; most city and county taxes still apply)
Residential property tax exemption for rooftop solar	Owner-occupied systems up to 100 kW AC that mainly serve the home are exempt from property tax

How exports are credited

Colorado has net metering at the retail energy rate for customers of its investor-owned utilities, mainly Xcel Energy. In August 2015 the Public Utilities Commission voted 3-0 to keep the program unchanged and close the case, after Xcel argued that solar customers did not pay their share of grid costs, according to Utility Dive. That rule has stayed in place since.

In 2021 the legislature passed SB21-261, signed June 21, 2021. Per the bill summary, it doubled the allowed size for on-site renewable systems from 500 kW to 1 MW, added storage as an eligible resource, and let customers carry monthly bill credits forward indefinitely unless they elect annual payment or donation to low-income assistance. Clean Energy Action describes it as lifting the old 120% of usage cap to 200%.

Xcel’s Colorado FAQ explains the two options for extra energy. Under “continuous rollover,” exports are converted to a dollar credit at the prevailing total energy rate (base energy rate plus per-kWh riders) for the time they were produced, and the credit offsets later bills but never pays out. Credits do not follow a customer who moves. Under the default, “waive decision,” the balance is paid out as a check at year end at Xcel’s average hourly incremental cost of energy, which is much lower than the retail rate. The Service and Facilities charge is not offset either way.

State incentives in 2026

Colorado does not offer a statewide solar income tax credit. Two tax exemptions apply to owners:

• Sales and use tax: the Department of Revenue exempts solar modules, racks, inverters and wiring from state sales tax and some special district taxes, under C.R.S. 39-26-724. The exemption excludes energy storage devices, labor and remote monitoring, and does not cover city or county taxes unless they adopted it. That publication is dated September 2021.
• Property tax: the Division of Property Taxation says independently owned residential solar up to 100 kW AC, on residential property and used mainly for the home, is exempt from property tax.

Xcel also has a Solar*Rewards program that pays for RECs, with a 20-year contract. The only rate found was a $0.005 per kWh example in an older FAQ. Xcel publishes current availability and rates on its program page, so it is not counted as an incentive here. Some counties and cities offer their own rebates under state law, which varies by location.

What it means for payback

Credits at the retail energy rate make exports worth close to the value of the power used at home, so system size and how much of the bill the credit offsets matter most. The rollover option is worth far more than the year-end payout for a system that regularly produces extra power. A battery matters less here than in states that pay low rates for exports.

Other rules worth knowing

HB26-1007, passed in the 2026 session, lets customers use plug-in portable solar devices, bars utilities from requiring pre-approval, and voids homeowner association covenants that block them, per the Independence Institute summary. This page did not confirm Colorado’s HOA rules for rooftop systems.

Berkeley Lab does not publish a Colorado median from enough systems, so the calculator starts from the U.S. median of $3.60/W. Put your own quote in.