Is solar worth it in Colorado?
For a typical Colorado home in 2026, solar is worth it: about a 12.4-year payback and $22,153 saved over 25 years after paying for the system. Check your own home, because roofs, usage and utilities vary a lot.
- Payback, typical home
- 12.4 yrs5.1 kW, paying cash
- Electricity price
- 16.6¢per kWh, U.S. 18.0¢
- Solar production
- 1,579kWh per kW per year
- Exports credited at
- RetailFull retail net metering
The numbers for a typical Colorado home
| Electricity use | 674 kWh a month (Colorado average) |
|---|---|
| Best-value system | 5.1 kW, producing 8,054 kWh a year (100% of use) |
| Price | $16,505 at about $3.05/W |
| First-year savings | $1,283 |
| Payback | 12.4 years |
| 25-year net | $22,153 (7.1% a year return) |
| Rate increase assumed | 2.6% a year, from Colorado's 2015–2025 history |
Paying cash, no federal credit, 5% discount rate, microinverters, $25 per kW a year for maintenance and repairs. Methodology.
Why it comes out this way
- Electricity costs 16.6¢ per kWh, close to the U.S. average of 18.0¢.
- Most utilities credit exported solar at or near the retail rate, so you get full value for midday surplus.
- A typical system here produces about 1,579 kWh per kW per year (ranked #5 of 51).
- There is no federal tax credit for homeowners who buy in 2026, which adds several years to payback compared with 2025.
Net metering and export rules in Colorado
Full retail net metering. Colorado requires investor-owned utilities like Xcel Energy to credit solar exports at the full retail rate, with credits rolling over month to month indefinitely. Co-ops and large municipal utilities must also offer net metering, though their rules and size limits differ.
IOUs: net excess generation credited at full retail as kWh credits carried forward indefinitely; customer can elect a cash payout at avoided cost (annual or on account closure).
- Netting: monthly
- Unused credits: Indefinite kWh rollover for IOU customers (SB21-261); optional payout of excess at average hourly incremental (avoided) cost.
- Fixed charges: Standard service and facilities charges. Xcel residential customers are on TOU rates by default. Some munis/co-ops (e.g., Colorado Springs Utilities proposed demand charges for net-metered customers; council rejected in 2025) consider separate solar charges.
- Last major change: SB21-261 (2021) expanded sizing and rollover rules for IOUs.
Read net metering explained to see why export rules can swing payback by years.
| Utility | Export credit | Notes |
|---|---|---|
| Xcel Energy (Public Service Co. of Colorado) | 13.5¢/kWh | Full retail kWh credits; TOU default (credits valued by TOU period). Solar*Rewards REC incentives modest; check current offerings. Retail figure approximate. |
| Black Hills Energy (Colorado Electric) | ~100% of retail | IOU net metering under state rules. |
| Colorado Springs Utilities | ~100% of retail | Municipal; net metering with its own terms. 2025 proposal to add demand charge for net-metering customers from 2027 rejected by city council. |
| Holy Cross Energy / other co-ops (e.g., United Power, IREA) | Varies by utility | Co-ops must offer net metering for small systems but rollover/payout rules differ; some offer upfront rebates. |
Solar incentives in Colorado
The federal 30% Residential Clean Energy Credit ended for systems installed after December 31, 2025. What that means.
| Program | Type | What you get | Status |
|---|---|---|---|
| Colorado state sales and use tax exemption for solar | sales tax exemption | Components used in residential/commercial solar systems are exempt from state sales and use tax (local taxes may apply unless locally exempted). Eligibility: Solar thermal and PV components. | active |
| Residential renewable energy property tax exemption | property tax exemption | Residential solar systems are exempt from property tax (residential renewable energy equipment is not assessed). Eligibility: Residential systems; details per county assessor. | active |
| Xcel Energy Solar*Rewards / Income-Qualified Solar*Rewards | performance payment | Xcel buys RECs from small solar customers (small per-kWh payment) and offers enhanced incentives for income-qualified customers; battery program (Renewable Battery Connect) offers upfront incentive in exchange for grid dispatch. Amounts change by year; verify. Eligibility: Xcel Colorado customers. | unknown |
What solar costs in Colorado
A fair cash price is around $3.05 per watt before incentives. For the 5.1 kW system that fits a typical home, expect roughly $13,200 to $18,700; smaller systems cost more per watt.
How many homes have solar
- Homes with net-metered solar (2025)
- 191,943
- Share of homes
- 7.5%
- Residential solar capacity
- 1,180 MW
- Growth over the past year
- +20.5%
Sources: EIA-861 (2025), EIA small-scale solar estimates, LBNL Tracking the Sun and state interconnection data.
Electric utilities in Colorado
| Utility | Homes served | Price (2026 est.) | Typical use | Typical-home verdict |
|---|---|---|---|---|
| Xcel Energy Colorado | 1,379,910 | 16.8¢ | 584 kWh/mo | Worth it |
| City of Colorado Springs | 220,059 | 16.3¢ | 602 kWh/mo | Worth it |
| CORE Electric Cooperative | 168,587 | 16.5¢ | 843 kWh/mo | Worth it |
| United Power | 103,104 | 17.4¢ | 797 kWh/mo | Worth it |
| Black Hills Colorado Electric | 97,888 | 19.8¢ | 506 kWh/mo | Worth it |
| City of Fort Collins | 71,804 | 15.2¢ | 610 kWh/mo | Close call |
| Mountain View Electric Association | 61,343 | 16.5¢ | 877 kWh/mo | Worth it |
| Poudre Valley REA | 50,933 | 13.2¢ | 875 kWh/mo | Close call |
| Holy Cross Electric Association | 50,431 | 13.2¢ | 1,124 kWh/mo | Close call |
| City of Longmont | 41,483 | 13.9¢ | 674 kWh/mo | Close call |
| La Plata Electric Association | 40,369 | 19.4¢ | 642 kWh/mo | Worth it |
| City of Loveland | 37,387 | 16.2¢ | 618 kWh/mo | Close call |
| Delta Montrose Electric Association | 32,985 | 15.8¢ | 718 kWh/mo | Worth it |
| Yampa Valley Electric Association | 23,604 | 17.9¢ | 859 kWh/mo | Worth it |
| San Isabel Electric Association | 23,415 | 19.9¢ | 628 kWh/mo | Worth it |
| Mountain Parks Electric | 19,571 | 18.5¢ | 730 kWh/mo | Worth it |
| Grand Valley Power | 17,657 | 17.1¢ | 796 kWh/mo | Worth it |
| City of Fountain | 17,088 | 14.8¢ | 713 kWh/mo | Close call |
| Empire Electric Association | 13,016 | 16.6¢ | 701 kWh/mo | Worth it |
| San Miguel Power Association | 12,379 | 17.8¢ | 799 kWh/mo | Worth it |
| San Luis Valley R E C | 8,948 | 20.5¢ | 649 kWh/mo | Worth it |
| Southeast Colorado Power Association | 8,169 | 18.9¢ | 708 kWh/mo | Worth it |
| Morgan County Rural Electric Association | 5,891 | 15.3¢ | 1,011 kWh/mo | Worth it |
| City of Fort Morgan | 5,434 | 7.7¢ | 1,028 kWh/mo | Not worth it |
| Highline Electric Association | 5,013 | 16.0¢ | 901 kWh/mo | Worth it |
Solar by city in Colorado
- Denver12.5-yr payback · Worth it
- Colorado Springs12.5-yr payback · Worth it
- Aurora12.4-yr payback · Worth it
- Fort Collins14.6-yr payback · Close call
- Lakewood12.9-yr payback · Worth it
- Thornton12.6-yr payback · Worth it
- Arvada13-yr payback · Worth it
- Westminster13-yr payback · Worth it
- Pueblo10.8-yr payback · Worth it
- Greeley12.8-yr payback · Worth it
- Centennial12.3-yr payback · Worth it
- Boulder13.3-yr payback · Worth it
- Highlands Ranch12.5-yr payback · Worth it
- Longmont13.2-yr payback · Worth it
- Castle Rock11.8-yr payback · Worth it
- Loveland13.6-yr payback · Close call
- Broomfield12.9-yr payback · Worth it
- Grand Junction12.6-yr payback · Worth it
- Commerce City12.6-yr payback · Worth it
- Parker12.3-yr payback · Worth it
- Littleton12.7-yr payback · Worth it
- Brighton12.5-yr payback · Worth it
- Northglenn12.6-yr payback · Worth it
- Windsor15-yr payback · Close call
- Security-Widefield10.8-yr payback · Worth it
- Pueblo West10.6-yr payback · Worth it
- Englewood12.5-yr payback · Worth it
- Erie13-yr payback · Worth it
- Dakota Ridge12.9-yr payback · Worth it
- Ken Caryl12.9-yr payback · Worth it
- Wheat Ridge12.9-yr payback · Worth it
- Lafayette13-yr payback · Worth it
- Fountain10.8-yr payback · Worth it
- Columbine12.9-yr payback · Worth it
Protect yourself when buying
- Check the license. No statewide general contractor license; electrical work requires a Colorado-licensed electrical contractor and master/journeyman electrician (DORA State Electrical Board). Local building licenses may apply. Look up an installer
- Cancellation rights. 3 business days to cancel many home-solicitation sales. No solar-specific disclosure law verified. How to cancel
- HOA and solar access. Yes. C.R.S. 38-30-168 prohibits HOAs from banning solar (reasonable aesthetic rules allowed); solar easements also authorized.
- Community solar. Yes - Community Solar Gardens program (Xcel and other utilities), including income-qualified carve-outs.
Questions about solar in Colorado
Is solar worth it in Colorado in 2026?
For a typical Colorado home, solar is worth it. A 5.1 kW system costing about $16,505 after state incentives saves about $1,283 in the first year and pays back in about 12.4 years. Your result depends on your roof, usage, utility and price, so run the calculator for your address.
How much do solar panels cost in Colorado?
A reasonable cash price is around $3.05 per watt before incentives, or roughly $13,200 to $18,700 for a 5.1 kW system.
Does Colorado have net metering?
Colorado requires investor-owned utilities like Xcel Energy to credit solar exports at the full retail rate, with credits rolling over month to month indefinitely. Co-ops and large municipal utilities must also offer net metering, though their rules and size limits differ.
Is there a solar tax credit in Colorado?
The 30% federal credit for homeowners ended for systems installed after 2025. Colorado does not offer a state income tax credit for solar that we're aware of. Solar may be exempt from property tax.
How do I check a solar installer's license in Colorado?
No statewide general contractor license; electrical work requires a Colorado-licensed electrical contractor and master/journeyman electrician (DORA State Electrical Board). Local building licenses may apply.. Look up any installer with the state's license search at https://apps2.colorado.gov/dora/licensing/Lookup/LicenseLookup.aspx.
Policy research current as of October 2026; sources include cleanenergyaction.org, programs.dsireusa.org, puc.colorado.gov. Electricity data: EIA, through July 2026. Found something out of date? Tell us.