Solar Financing in Colorado
Lease vs. Buy vs. PPA — Complete financing guide for CO homeowners
Urgent tax credit deadlines
- Section 48E phase-out completes December 31, 2027 — projects must be placed in service by then (515 days left).
⚠ The 30% Federal Solar Tax Credit (48E/ITC) expired July 4, 2026.
Selecting 30% ITC assumes you began construction before this deadline. Most new purchases no longer qualify.Learn about your options after the deadline →
Going solar in Colorado? With electricity rates averaging16.54¢/kWhand excellent solar resources, choosing the right financing option can save you $22,300 or more over 25 years. This guide breaks down every option available to Colorado homeowners.
Avg Rate
16.54¢
per kWh
Solar Resource
Excellent
CO
Typical System
8kW
residential
Payback
~13.0 yrs
estimated
Solar Incentives & Tax Credits in Colorado
Colorado homeowners can take advantage of the following solar incentive programs:
Federal Solar Investment Tax Credit
30% federal tax credit via Section 48E for qualifying projects (leases, PPAs, commercial) that began construction before July 4, 2026. The residential ownership credit (25D) expired December 31, 2025. Phase-out deadline: December 31, 2027 for placed-in-service.
30% of system cost
Xcel Energy Solar*Rewards
Xcel Energy Solar*Rewards is OPEN — reopened May 21, 2026 (finite budget, first-come-first-served). Standard incentive is a production-based REC at $0.030–$0.045/kWh (≈$0.037/kWh midpoint), paid as monthly bill credits over a 10-year term for Small Rooftop systems ≤ 10 kW AC (per-kWh, NOT a per-kW upfront amount). Income-Qualified / DIC adder: $1.00/W upfront rebate, capped at 10 kW AC = $10,000 maximum (Xcel official; ProGreen Solar cites a $5,000 cap for a specific budget window). Xcel Energy residential customers (Front Range) only — Black Hills Energy and member cooperatives have separate programs.
≈$0.037/kWh over 10 yr + $1.00/W IQ adder (up to $10,000)
Solar and Wind Energy Property Tax Exemption
Solar energy systems are exempt from property tax on the added value (CO Rev. Stat. 39-1-102(20.5)).
100% property tax exemption
EnergySmart Colorado
Several Colorado counties offer advisory services and limited rebates for residential solar through the EnergySmart program.
Varies by county
Net Metering in Colorado
Colorado mandates net metering at the full retail rate for residential systems up to 10 kW under PUC rules, with an optional time-of-use export credit.
✓ Colorado offers a property tax exemption for solar installations, meaning your property taxes won't increase despite the added home value.
✓ Colorado exempts solar equipment from sales tax, saving you money at purchase.
Compare Financing Options in Colorado
See how cash purchase, solar loan, lease, and PPA compare based on Colorado's average rates:
Solar Financing Comparison for Colorado
Based on 16.54¢/kWh electricity rate and a 8kW system
Cash Purchase
Pay upfront — maximum long-term savings
- Upfront Cost
- $24,000
- Monthly Savings
- $154/mo
- Tax Credit Eligible
- Expired
Solar Loan
$0 down — own the system over time
- Down Payment
- $0
- Monthly Payment
- $235/mo
- Net Monthly
- $-81/mo
- Tax Credit Eligible
- Expired
Solar Lease
$0 down — provider owns the system
- Down Payment
- $0
- Monthly Payment
- $104/mo
- Net Monthly
- $50/mo
- Tax Credit Eligible
- No
Power Purchase Agreement
$0 down — pay per kWh produced
- Down Payment
- $0
- Annual Savings
- $1,236/yr
- Tax Credit Eligible
- No
⚠ The 30% Federal Solar Tax Credit (48E/ITC) expired July 4, 2026.
Selecting 30% ITC assumes you began construction before this deadline. Most new purchases no longer qualify.Learn about your options after the deadline →
Estimates based on average Colorado (CO) rates and system costs. For a personalized comparison,use our full financing calculator.
Lease vs. Buy vs. PPA in Colorado
Buying (Cash or Loan)
Best for: Maximizing long-term savings and home value.
- You own the system and all electricity it generates
- The 30% federal tax credit expired July 2026 (post-48E residual only — see warning below)
- Property tax exempt in Colorado
- Increases home value by an average of 4.1%
- Highest 25-year savings: ~$22,300
- You handle maintenance (panels need little)
Solar Lease
Best for: Zero upfront cost with predictable payments.
- $0 or low upfront cost
- Fixed monthly payment (no surprise bills)
- Maintenance and repairs typically covered
- Not eligible for tax credits or incentives
- Lower 25-year savings (~$15,100)
- May complicate home sale (lease transfer)
Power Purchase Agreement (PPA)
Best for: Paying only for what you produce, $0 down.
- $0 upfront cost
- Pay a per-kWh rate (typically lower than utility)
- Provider owns and maintains the system
- Not eligible for tax credits
- Rate escalates 2-3% annually (read the contract)
- Lowest 25-year savings of the three options
Solar Financing FAQ — Colorado
Is solar worth it in Colorado?
Yes, solar is a worthwhile investment in Colorado. With moderate electricity rates averaging 16.54¢/kWh and excellent solar resources, a typical 8kW system can offset most of your household electricity usage. The estimated payback period is 9-11 years, after which you enjoy more than a decade of largely free electricity. colorado mandates net metering at the full retail rate for residential systems up to 10 kw under puc rules, with an optional time-of-use export credit is the main policy factor to verify with your utility.
What solar incentives are available in Colorado?
Colorado residents can claim the 30% Federal Solar Investment Tax Credit (worth $7,200 on a typical 8kW system). The state also offers Xcel Energy Solar*Rewards, Solar and Wind Energy Property Tax Exemption, EnergySmart Colorado. Colorado offers a property tax exemption, so your property taxes won't rise despite the added home value; Colorado exempts solar equipment from sales tax, saving you money at purchase.
Should I lease, buy, or get a PPA in Colorado?
Buying your solar system (cash or loan) maximizes long-term savings and qualifies you for the 30% Federal Tax Credit. On a typical 8kW system in Colorado, that's about $7,200 back. Buying yields roughly $29,512 in net savings over 25 years. Leasing or a PPA requires $0 down and includes maintenance, but you won't get tax credits and your 25-year savings will be much lower (around $15,112). If you can afford the upfront cost or qualify for a low-rate loan, buying is the clear winner in Colorado.
How much does a solar system cost in Colorado?
A typical 8kW residential solar system in Colorado costs approximately $24,000 before incentives. After the 30% Federal Tax Credit (~$7,200), the net cost drops to about $16,800. Actual costs vary based on equipment quality, installer, roof complexity, and whether you add battery storage. Colorado offers a property tax exemption, so your property taxes won't rise despite the added home value; Colorado exempts solar equipment from sales tax, saving you money at purchase.
Does Colorado have net metering?
Colorado mandates net metering at the full retail rate for residential systems up to 10 kW under PUC rules, with an optional time-of-use export credit.
What is the solar payback period in Colorado?
The typical solar payback period in Colorado is approximately 9-11 years. With a net system cost of about $16,800 after the federal tax credit and annual electricity savings of roughly $1,667-$2,038 (based on 16.54¢/kWh), most Colorado homeowners see full payback within 11 years and enjoy 14+ years of largely free electricity thereafter.
Related Solar Tools
Estimates are based on Colorado average rates and system costs. The 30% Federal Solar Investment Tax Credit expired July 4, 2026 for new residential installations. Actual savings vary by installer, equipment, roof, and utility policy.