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Financial Incentives for Renewable Energy   Arrow divider image - marks separation between nested pages that are listed as breadcrumbs.

There are three main types of financial incentives for renewable energy in Colorado: federal tax credits, rebates, and utility performance-based incentives.

Federal Tax Credits

Federal tax credits are available for solar PV, solar hot water, small wind (up to 100 kW), and geothermal (ground source) heat pumps as follows:

  • 30% through 2019
  • 26% in 2020
  • 22% in 2021

Tax credits or solar are available both for principal and secondary residences as well as for new and existing homes. Rental homes do not qualify. For businesses, the tax credit schedule is the same as above, but a 10% tax credit is provided in 2022 and thereafter for solar.


Rebates are sometimes provided for solar PV. Rebates are most commonly provided by electric utilities, but are sometimes provided by non-profit organizations. These rebates are usually provided on a cost-per-watt basis and are capped at a certain amount. For instance, a utility may provide a rebate of $0.50/watt up to $2,000. For a typical 5,000 watt home solar array, the $2,000 cap would be reached before the full $2,500 rebate could be received.

Performance-Based Incentives

Some electric utilities may provide performance-based incentives (PBIs) for solar PV. A PBI is a payment for every kilowatt-hour you generate with solar energy. Terms are commonly 10 or 20 years. For instance, a utility might offer to pay you two cents for every kWh you generate with solar for 10 years. For an average home that produces 8,000 kWh per year, the incentive would equal $160 annually.

Note that if a utility offers incentives for solar, it will likely lay claim to your Renewable Energy Credits in the process. This means that technically, your utility gets the credit for generating renewable energy, not you.

Last updated: February 15, 2018 at 12:56 pm