Colorado Free Solar Options: Grants & Financing Available!

Power Purchase Agreement (PPA)

The most common path to "free" solar is a Power Purchase Agreement directly between you and a state-licensed solar energy company. Under a "PPA", the solar company absorbs the full cost of the solar panel equipment and installation for you.

The solar company is technically the owner of the equipment, however, they are responsible for providing you with electricity produced from your home for a guaranteed fixed rate (unlike the unpredictable rising costs of traditional utilities). They are also responsible for any continued maintenance or repairs the solar system may require.

This can be a great option if you don’t want to buy or simply can’t afford to buy the solar panels outright. Even though the homeowner isn’t purchasing the actual solar system, they still enjoy the benefits of solar energy and save money on their electricity bills.

Colorado State Solar Programs

Colorado has two statewide rebate programs and some of the best solar incentives in the US. Additionally, local governments and utility companies provide generous solar programs, each with unique eligibility requirements.

Energy Smart Colorado provides rebates up to $2,500 depending on where you live in the state. Holy Cross Energy is an electric co-op serving Western Colorado that offers a rebate via their renewable energy incentive program worth $250 per kilowatt of installed solar capacity. That’s another $2,500 in your pocket for an average solar system sized at 10kW!

There’s also statewide tax exemptions for both residential and commercial renewable energy systems. When combined, the plethora of incentives in Colorado significantly offset the cost of going solar and can even provide a financial return.

Considering how specific each program is to the details of your home, we strongly suggest you speak with a local solar expert to review all of your best options.

Additional Financial Benefits

In addition to these programs, there are many financial benefits for homeowners in Colorado who switch to solar energy. Some of the biggest incentives and benefits are:

Federal Tax Credit: Formerly known as the Solar Investment Tax Credit (ITC), this program was extended in 2022 and renamed the Residential Clean Energy Credit. Homeowners who install solar can claim a massive federal tax credit worth 30% of the gross system cost (including panels, related equipment, wiring, installation, permits, and fees). That means that if the gross system cost is $20,000, your federal tax credit would be a whopping $6,000!

Net Metering: Net metering is a buyback program that pays you credits for any excess energy your solar panels produce and send back to the grid. You can then apply those credits towards future energy bills.

In Colorado, the major utility companies (like Xcel Energy and Black Hills Energy) provide 1-to-1 net metering terms. This means that you’re compensated for the power your solar system produces at the same retail rates that grid energy is purchased, so that any grid energy used at night (or in cloudy conditions) can be offset by excess solar production during the day.

Multiple Tax Exemptions: Homeowners with solar can receive a property tax exemption for the value of their system. This allows homeowners to increase their property values without increasing their taxes.

The state also applies a Sales Tax Exemption to the purchase of the system, so residents won't have to pay the 2.9% CO state sales tax. So if your solar energy system costs $20,000 total, you’ll save an additional $580 off taxes!