Xcel Energy (Public Service Company of Colorado) credits your rooftop solar exports at the full retail rate, roughly 16.16 cents per kWh, with monthly credits that roll forward and a once-a-year settlement choice. Colorado gets a lot of sun, so a typical Denver-area home makes about 11,165 kWh a year. The 30% federal homeowner credit ended after December 31, 2025.
If Xcel Energy is your electric utility in Colorado, this page explains how rooftop solar pays you back in 2026. Xcel, which operates in the state as Public Service Company of Colorado, is Colorado’s largest electric utility, and it runs the net-metering and interconnection process for home solar. Colorado power costs are close to the national average, so the real driver here is abundant sunshine plus retail-rate net-metering credits. Below is what Xcel credits, how the annual true-up works, where the Solar*Rewards incentive fits, how to connect, and how to tell if your home is a good fit.
According to MySolarFY’s analysis (August 2026), a typical 7 kW rooftop system in the Denver area produces about 11,165 kWh a year (NREL PVWatts), which at Colorado’s residential rate near 16.16 cents per kWh (EIA, May 2026) offsets roughly $1,800 of grid electricity a year before any incentives.
Xcel Energy Colorado at a glance
Xcel Energy runs net metering and interconnection across its Colorado service territory, which covers the Denver metro area and much of the Front Range. Here is the quick picture for a home solar customer.
| Detail | What to know |
|---|---|
| Utility name | Xcel Energy, operating in Colorado as Public Service Company of Colorado (PSCo) |
| Service territory | Denver metro and much of the Front Range; Colorado’s largest electric utility |
| Residential rate | About 16.16 cents per kWh statewide (EIA, May 2026); most Xcel homes are now on time-of-use pricing, so check your rate plan |
| Net metering | Retail-rate 1:1 credits for exports; monthly credits roll forward (DSIRE) |
| Annual settlement | Keep rolling credits forward, or take a yearly cash-out at Xcel’s avoided-cost rate, which is well below retail |
| Solar*Rewards | Xcel’s solar incentive program; verify current availability and payment with Xcel before you plan around it |
| Before you switch on | Xcel must grant Permission to Operate |
For the statewide picture beyond Xcel, see our Colorado solar guide, and to weigh system pricing, see what solar costs in Colorado.
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How Xcel Energy credits your solar in Colorado
Xcel credits your exports at the retail rate, banks them monthly, and settles once a year.
Colorado requires investor-owned utilities like Xcel to offer net metering, and Xcel credits the power your system sends to the grid on a one-for-one basis at the retail rate (DSIRE). Each month Xcel bills you on your net usage, the power you pulled from the grid minus the power you exported, and any surplus becomes a kWh credit that rolls forward to later months rather than expiring. Once a year at the settlement date you have a choice: keep rolling your remaining credits forward, or take a cash payment for the leftover net excess generation. That annual cash-out is paid at Xcel’s avoided-cost rate, which is well below the retail rate, so it is worth much less per kWh than an on-bill credit. Because the cash-out is low, the smart move is to size a system close to your yearly usage rather than oversizing it to chase a big year-end payout. For the mechanics of export credits, see how net metering credits your solar exports.
| What you earn | How it is valued | Who receives it |
|---|---|---|
| Monthly net-metering credits | Retail-rate kWh credits that roll forward | The Xcel account holder |
| Year-end net excess generation | Avoided-cost rate, below retail (or carry forward instead) | The account holder |
| Solar*Rewards incentive | Utility program tied to your system’s renewable energy; verify current terms with Xcel | The system owner |
To see how the bill credit lowers your monthly cost, read how solar lowers your electricity bill, and to weigh payback, see the financial case for whether solar panels are worth it.
What is Xcel’s Solar*Rewards program?
Solar*Rewards is Xcel Energy’s long-running incentive program for customer rooftop solar in Colorado, tied to the renewable energy your system produces. Program availability, budgets, and the exact payment change over time and by program year, and we could not confirm the current 2026 open or closed status and payment from Xcel’s own live materials. So treat Solar*Rewards as a possible extra on top of net metering, not a guaranteed number, and verify the current availability and incentive directly with Xcel or your installer before you plan around it. Whether the program is open or not, retail-rate net metering and Colorado’s abundant sun are the steady drivers of solar value here.
How to connect solar to Xcel in Colorado
Connecting a home system to Xcel follows a set order, and the key rule is that you cannot turn the system on until Xcel grants Permission to Operate. The general path is:
- Interconnection application. You or your installer file an interconnection application with Xcel for your system size and equipment.
- Utility review and approval. Xcel reviews the application and returns an approval or interconnection agreement to sign.
- Install and inspect. The system is installed and passes your city or county electrical inspection.
- Meter set. Xcel installs or configures a bidirectional meter that measures both the power you use and the power you export.
- Permission to Operate. Xcel issues Permission to Operate. The system may not run on the grid before this.
Colorado sizes home net-metered systems to your own electricity use rather than allowing an unlimited system, and the exact cap can vary by program, so confirm the current sizing rule with Xcel’s interconnection materials or your installer before design. A licensed installer normally manages this whole process for you. For the questions to ask, see the right questions to ask a solar installer.
Colorado’s state solar incentives
Beyond Xcel’s net metering, Colorado offers state-level help that lowers the cost of going solar. The details can change, so confirm current terms through DSIRE or a tax professional:
- A state sales-and-use tax exemption on qualifying residential solar equipment, which trims the up-front purchase cost.
- A property-tax exemption so the added home value from a residential solar system is not taxed as extra property value.
- Local and program add-ons can exist in some cities and utilities, so it is worth checking what applies at your address. For the national picture, see our guide to solar incentives, or the full state stack in our Colorado solar incentives for 2026.
These state benefits follow ownership, so on a lease or PPA the company that owns the panels usually claims them, while your benefit is a lower or fixed power price with no up-front cost.
What changed federally, and what it means for Xcel customers
The federal homeowner credit is gone, but Colorado’s sun and retail-rate net metering are not. The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act, so a Colorado homeowner who buys solar with cash or a loan in 2026 cannot claim it (IRS; SEIA). Net metering and Colorado’s state exemptions were not affected. For the full timeline, see what the federal solar tax credit change means in 2026.
One federal exception exists, and it is not yours to claim. A separate commercial credit, Section 48E, is claimed by the business that owns a leased or PPA system, not by the homeowner, and it runs for projects placed in service through 2027, with a begin-construction safe harbor by July 4, 2026 (IRS Clean Electricity Investment Credit). For a leased system on an Xcel account you do not file for a federal credit yourself; the company that owns the panels does. The 25D homeowner credit, by contrast, ended after December 31, 2025.
How to choose a solar installer in Xcel territory
The Front Range is a deep solar market, so you have many licensed installers to compare. Rather than chasing a “best” list, screen any installer against objective criteria:
- NABCEP certification, the industry’s professional standard for PV installers.
- Proper Colorado licensing and any required local electrical and building permits.
- A clear workmanship and equipment warranty in writing.
- Real experience with Xcel interconnection, so the paperwork and Permission to Operate go smoothly.
- A written production estimate and a transparent quote that is honest about the avoided-cost annual settlement and time-of-use rates. For a checklist, see the right questions to ask a solar installer.
MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes side by side, with no obligation.
Frequently asked questions
Does Xcel Energy offer net metering in Colorado?
Yes. Colorado requires investor-owned utilities like Xcel to offer net metering, and Xcel credits your solar exports at the full retail rate on a one-for-one basis (DSIRE). Monthly credits roll forward to later bills. Once a year you choose to keep rolling credits forward or take a cash payment for the leftover net excess generation, and that annual cash-out is paid at Xcel’s avoided-cost rate, which is well below retail. Because the cash-out is low, sizing a system close to your yearly usage gives the best result.
What is Xcel’s Solar*Rewards program and is it open?
Solar*Rewards is Xcel Energy’s incentive program for customer rooftop solar in Colorado, tied to the renewable energy your system produces. Availability and the payment change by program year, and we could not confirm the current 2026 status and amount from Xcel’s own live materials, so verify it directly with Xcel or your installer. Treat it as a possible extra on top of net metering, not a guaranteed figure.
How do I connect solar to Xcel in Colorado?
You or your installer file an interconnection application with Xcel, Xcel reviews and approves it, you sign the interconnection agreement, the system is installed and passes a local inspection, Xcel sets a bidirectional meter, and then Xcel issues Permission to Operate. You cannot turn the system on until you have that permission. A licensed installer usually handles the paperwork for you.
What happened to the federal solar tax credit for Colorado homeowners?
The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act, so a Colorado homeowner who buys solar in 2026 with cash or a loan cannot claim it. A separate commercial credit (Section 48E) can apply to leased and PPA systems, but the business that owns the system claims it, not the homeowner. Colorado net metering and the state exemptions were not affected.
What incentives does Colorado offer for home solar?
Colorado offers a state sales-and-use tax exemption on qualifying residential solar equipment and a property-tax exemption so the added home value from solar is not taxed as extra property value. Some cities and utilities add their own programs. Details can change, so confirm current terms through DSIRE or a tax professional before you plan around them.
Do I qualify for Xcel net-metering credit if I lease or sign a PPA?
Net-metering credits normally follow the Xcel account, but on a lease or PPA the company that owns the panels often keeps the credits and any Solar*Rewards or state benefits, depending on the contract, while your benefit is a lower or fixed power price with no up-front cost. If you want the net-metering value and the state incentives in your own name, owning the system through cash or a loan is the path that captures them.
Reviewed by the MySolarFY team as of August 2026. Figures were verified against the linked EIA, NREL PVWatts, DSIRE, IRS, and SEIA sources; the retail rate, the annual settlement rate, Solar*Rewards availability, and Colorado’s incentives all move over time, so confirm current terms with Xcel Energy before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about the MySolarFY team and how we work.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase; on a lease or PPA the net-metering credits and any incentives often go to the company that owns the system, not the homeowner. Homeowners do not get the federal residential credit that ended after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
