In 2010, Colorado became the first state to enable community solar with the Community Solar Gardens Act (HB 1342). Colorado’s program requires that Xcel Energy and Black Hills Energy, the state’s two investor-owned utilities, purchase electricity from community solar gardens. The state has since expanded the program through a 2016 settlement deal with Xcel Energy and several rounds of legislation, incrementally increasing the cap on program-wide generating capacity.
Under Colorado law, each community solar garden can have a generating capacity between 10 kilowatts and 5 megawatts — though projects at preferred locations may be allowed up to 10 megawatts. Subscribers receive full retail credit for their portion of solar generation, with a small charge to cover distribution costs. All retail customers can subscribe, but in both 2026 and 2027, the two participating utilities must make available 53.5 megawatts of inclusive community solar capacity.
See Colorado’s program progress in our Community Solar Tracker.
Utilities, for-profit companies, and nonprofits can build and own community solar projects in Colorado. To secure capacity, developers must bid and compete in response to the utility’s request for proposal (RFP). The utility purchases any associated renewable energy certificates through bill credits or a payment to the garden owner and must buy unsubscribed electricity at the utility’s incremental cost of electricity from the previous year.
The Inclusive Community Solar Mandate
2024’s Access to Distributed Generation bill (SB24-207) revised Colorado’s community solar program yet again, with most changes taking effect in 2026. In that year, Xcel Energy must make available 50 megawatts of inclusive community solar capacity, while Black Hills Energy must make 3.5 megawatts available. The amounts were determined according to the size of each company’s customer base. Xcel Energy and Black Hills Energy are to repeat this process in 2027 and the Public Utilities Commission will reevaluate the program in 2028.
Previously, Xcel’s community solar offerings were limited to its requests for proposals – 70 megawatts in 2023 — with an overall goal of soliciting 300 megawatts by 2025. Black Hills Energy’s program was capped at three megawatts. The inclusive community solar program replaces this legacy program and it is unclear if or how unrealized capacity from the legacy program will roll over.
To qualify as inclusive community solar, a garden must reserve 51 percent of its generation capacity for income-qualified subscribers – households making up to 200 percent of the federal poverty line or up to 80 percent of the Colorado median income. Subscribers can self-attest their income beginning in 2026 (a best practice for promoting equity).
Inclusive community solar capacity is awarded on a first-come, first-served basis with priority for gardens on rooftops, parking lots, brownfields, and other previously disturbed lands. Developers awarded inclusive community solar capacity can at most charge a subscription rate of 75 percent of the bill credit value to income-qualified subscribers — meaning participating low-income households will save at least 25 percent on their electric bills. If a developer received federal Inflation Reduction Act tax credits, they must offer even greater discounts.
Supporting Workers, Subscribers, and Communities
Starting in 2026, community solar facilities must comply with the requirements of the Colorado Energy Sector Public Works Project Craft Labor Requirements Act (2023). The Act requires that certain generation projects (those receiving state funding or utility customer funding) abide by the state’s apprenticeship utilization law and prevailing wage law.
The 2024 bill made several improvements to ease the residential subscriber experience and reduce participation barriers for low-income households. Consolidated billing — where the community solar subscription fee is included on a customer’s electric bill — will be available to subscribers starting in 2026. For residential customers, subscriber organizations are prohibited from using credit scores to deny prospective subscribers and cannot charge subscription termination fees.
In addition to its requirement to procure inclusive community solar, Access to Distributed Generation (2024) also requires that Xcel Energy acquire 50 megawatts of dispatchable distributed generation, or retail distributed generation paired with energy storage, by June 1, 2026. The company will then have to acquire an additional 50 megawatts between January 1, 2027, and June 1, 2027. Community solar is eligible as distributed generation, and when paired with storage, increases community resilience.
Designed with Inclusion in Mind
The inclusive community solar capacity ordered by 2024’s Access to Distributed Generation bill is the latest step in Colorado’s efforts to increase access to solar.
Colorado’s 2010 community solar pilot, launched by The Community Solar Gardens Act, encouraged the creation of community solar gardens by investor-owned utilities or third party developers. This program introduced community solar as a tool to reduce energy burden, as it had a five percent carve-out for low-income subscribers. For non-regulated utilities, such as rural electric cooperatives, the Colorado Energy Office launched a low-income community solar demonstration project in 2015 through the Weatherization Assistance Program.
In 2016, the Colorado Public Utilities Commission approved a settlement with Xcel Energy over what was then among the most comprehensive low-income solar programs in the country. The settlement approved an additional 117 megawatts of community solar gardens, with 15 percent of the new community solar capacity to be allocated to low-income households. The settlement also defined the requirements for low-income participation in Renewable Energy Standard Adjustment (RESA) funded community solar garden projects.
As other states followed Colorado’s lead and passed community solar-enabling legislation, many raised the bar for inclusion and access. The inclusive community solar capacity to be awarded in 2026 and 2027 will bolster Colorado’s community solar market, support more low-income households, and raise Colorado closer to the equitable community solar standard.
For more on solar in Colorado, check out these ILSR resources:
- Voices of 100%: Colorado Town’s Residents and Businesses Join Forces for Clean Energy (2019)
- Boulder’s Path to 100% Renewable Energy (2018)
- Voices of 100%: Shifting the Paradigm toward Renewable Power in Pueblo, Colo. (2018)
- Colorado’s Community Solar Program Allots 9 MW in 30 Minutes (2012)
- A First Look at Colorado’s Community Solar Gardens (2011)
- Colorado Voters Approve Renewable Energy Ballot Initiative (2004)
Learn more about Community solar in one of these ILSR reports:
For podcasts, videos, and more, see ILSR’s community renewable energy archive.
For timely updates from the Energy Democracy Initiative, follow John Farrell on Twitter, subscribe to the Energy Democracy weekly update, and check out the Local Energy Rules podcast.
Featured photo credit: Let Ideas Compete (CC BY-NC-ND 2.0)