Colorado Solar Power: 2026 Costs, Incentives & Savings
Solar in Colorado
Colorado ranks 9th in the nation for residential solar installations — and it’s easy to see why. With abundant sunshine and electricity prices that climbed 22% between 2020 and 2024, more homeowners are looking for ways to take control of their energy costs.
Whether you’re just starting to explore your options or ready to make the switch, this guide covers everything you need to know about solar panels for your home in Colorado — from how installation works to what you can expect to save.
COLORADO by the Numbers
9th Most residential solar in the United States
161k Households have installed solar panels
5.6 Average daily peak sun hours
~$58k Colorado average savings over 25 years
Colorado Solar Panel Cost
Wondering what solar actually costs in Colorado? We built this calculator using real installation data from homes across the state — from Denver and Colorado Springs to Fort Collins and Pueblo. See your estimated monthly lease payment through Palmetto’s LightReach program (no upfront cost) or compare a cash purchase option, so you can choose what works best for you.
Lease Cash Purchase
System Size
This system size is designed to offset approximately 100% of the average electricity usage for a home in Colorado.
Recommended System
6.56 kW
Typical for your home size in CO
Your Monthly Payment
Estimated monthly cost with LightReach
$77/mo
As low as $77/mo
Why Lease Solar?
Following the 2025 Big Beautiful Bill, the federal 30% solar tax credit is no longer available for cash purchases. With a LightReach lease, Palmetto owns the system and still qualifies for the commercial ITC — passing those savings through to you via lower monthly payments.
- No upfront investment
- Palmetto handles all maintenance
- 90% Production Guarantee
- Comprehensive protection program included
Cost Breakdown
Your estimated investment
System Cost
$19,534
Cost Per Watt
$2.98/W
Final Cost
$19,534
Savings
Your total financial benefit
Monthly Savings
Average utility bill reduction
$131
Payback Period
Break-even point
10.7 years
25-Year Savings
$57,602
Get Your Personalized Quote
Key Takeaways
- Colorado ranks 9th in the nation for residential solar — with 5.6 peak sun hours daily, it’s one of the best states for solar energy production.
- Leasing solar through Palmetto’s LightReach program means no upfront cost, a fixed monthly payment as low as $77, and Palmetto handles all maintenance.
- Colorado offers strong solar incentives — including a property tax exemption, sales tax exemption, and utility rebates that can meaningfully reduce your costs.
Colorado Electricity Prices
Electricity in Colorado has been getting more expensive — and that trend shows no signs of slowing down.
Colorado’s average electricity rate climbed from 13.1¢ per kWh in 2021 to 15.1¢ in 2024 — a 15% increase in just four years. While that’s still below the national average of 16.5¢, the gap is narrowing fast.
Solar panels can help offset those rising costs by generating your own electricity at home. The more your utility rates climb, the more value your solar system produces — giving you a natural hedge against future increases.
Programs like Palmetto’s LightReach let homeowners go solar with no upfront cost. You pay a low, fixed monthly rate — and Palmetto owns, monitors, and maintains the system — so rising utility prices don’t have to be your problem.
Price of Energy: Colorado vs National Average
0¢
10¢
20¢
30¢
13.7¢
13.1¢
15.0¢
14.2¢
16.0¢
14.3¢
16.5¢
15.1¢
2021
2022
2023
2024
US Average
Colorado
Source: US Bureau of Labor Statistics, Energy Information Administration, Form 861
Colorado Area Utility Providers
Colorado homeowners are served by three major utilities — CORE Electric, Xcel Energy, and Colorado Springs Utilities. In 2023, their rates ranged from 13.8¢ to 14.5¢ per kWh, all below the national average of 16.0¢.
Colorado’s competitive rates reflect a diverse energy mix and efficient grid infrastructure. That said, all three utilities sit near or above the 2023 state average of 14.3¢ per kWh — and utility rates across the state have been trending upward.
Colorado Utilities Electricity Rates
| Utility | Rate |
|---|---|
| CORE Electric | 14.50¢ |
| Xcel Energy | 14.30¢ |
| Colorado Springs Utilities | 13.80¢ |
| CO Average | 14.30¢ |
| US Average | 16.0¢ |
Source: US Energy Information Administration, 2023, Form 861, Table 6
Colorado Solar Incentives
Colorado homeowners have access to a strong set of solar incentives in Colorado — from statewide tax exemptions to utility rebates that can meaningfully reduce your installation costs.
At the state level, Colorado offers a sales tax exemption on solar equipment, a full property tax exemption so your home’s assessed value won’t increase, and a 10% tax credit on qualifying home battery storage systems (through December 31, 2026).
Local utilities — including Xcel Energy, Holy Cross Energy, Black Hills Energy, and several municipal providers — offer their own rebates for solar and battery storage, with amounts and eligibility varying by location.
Incentive Table
| Incentive | Type | Description | Source |
|---|---|---|---|
| Colorado Residential Energy Storage System Tax Credit (DR-1307) | Tax Credit | Colorado homeowners can claim a 10% state income tax credit on the cost of a qualifying home battery storage system, including components, sales tax, and shipping — expiring December 31, 2026. | Learn More |
| Colorado Solar Equipment Sales Tax Exemption | Sales Tax Exemption | Colorado exempts solar energy equipment from the state’s 2.9% sales and use tax, reducing the upfront cost of a solar installation automatically at the point of purchase. | |
| Colorado Residential Solar Property Tax Exemption | Property Tax Exemption | Colorado law provides a 100% property tax exemption for residential solar systems, meaning adding solar panels will not increase your home’s assessed value or property tax bill. | Learn More |
| Colorado Net Metering Policy | Net Metering | Colorado law requires investor-owned utilities (Xcel Energy and Black Hills Energy) to credit residential solar customers at the full retail rate for excess electricity exported to the grid. |
Colorado Solar Irradiance
Solar panel production varies throughout the year based on daylight hours, weather patterns, and sun intensity. Colorado’s 300+ sunny days and high elevation boost solar production year-round. Even snowy winters help — cold temps improve panel efficiency. Colorado is an excellent state for solar energy.
About the Data
This map shows average daily solar energy across Colorado based on historical data.
Key Facts:
- Values shown are daily averages
- Based on 18 years of satellite data
- Click any area for detailed estimates
What Can the Average Colorado Solar System Power?
Summer Production (July)
51.2 kWh/day
In July, your 10 kW system could power:
- 3.6 average Colorado homes (15 kWh/day per home)
- or Run central AC for 18 hours AND power all other appliances
- or Fully charge 5.4 Tesla Model 3 electric vehicles
Winter Production (December)
31.0 kWh/day
In December, your 10 kW system could power:
- 2 average Colorado homes (15 kWh/day per home)
- or Keep your home heating system running for 15 hours
- or Fully charge 3 Tesla Model 3 electric vehicles
Annual Production
15992 kWh/year
Over a year, your 10 kW system could:
- Offset 10 tons of carbon dioxide emissions
- or Equal the environmental benefit of planting 175 trees
- or Save approximately $4,234 in electricity costs
Go Solar with LightReach — No Upfront Cost
Colorado homeowners have a straightforward path to solar with no upfront cost. Through Palmetto’s LightReach program, a Power Purchase Agreement (PPA) is available across major Colorado utilities — including Xcel Energy, United Power, Black Hills Energy, Colorado Springs Utilities, CORE Electric Cooperative, Grand Valley Power Cooperative, and DMEA.
Frequently Asked Questions
Does Colorado have net metering? Yes. Colorado law requires all investor-owned utilities — primarily Xcel Energy and Black Hills Energy — to offer net metering to residential solar customers.
Do solar panels increase your home value in Colorado? Yes — but only if you own the system outright. Research shows that homes with solar panels sell for approximately 4.1% more than comparable homes without solar.
How much does it cost to go solar in Colorado? For most Colorado homeowners, the most accessible way to go solar is through Palmetto’s LightReach lease — with no upfront cost and a fixed monthly payment as low as $77/mo.
What’s the best solar company in Colorado? Palmetto is one of the top solar companies serving Colorado homeowners.
Do solar panels work in Colorado’s climate? Yes, solar panels work very well in Colorado. The state averages 5.6 peak sun hours per day and enjoys more than 300 sunny days annually.
What solar incentives are available in Colorado? Colorado offers several strong solar incentives at the state level: a 100% property tax exemption, a sales tax exemption on solar equipment, and a 10% state income tax credit on qualifying home battery storage systems.