Solar and wind energy facilities property used to produce two (2) megawatts or less of AC electricity are locally assessed. In addition, locally assessed renewable energy property includes small or low impact hydroelectric facilities, geothermal energy facilities, and biomass energy facilities as defined in § 39-4-101, C.R.S., used to produce two (2) megawatts or less of AC electricity and placed into use prior to January 1, 2010.
For information on locally assessed renewable energy property, please see Assessors' Reference Library, Volume 5, Chapter 7.
All renewable energy systems with greater than two (2) megawatts of AC electricity generation capacity are valued as public utility property by the Division of Property Taxation. Small or low impact hydroelectric facilities, geothermal energy facilities, and biomass energy facilities, as defined in § 39-4-101, C.R.S., that are put into use on or after January 1, 2010 and not primarily designed to supply electricity for consumption on site, are state assessed regardless of AC generation capacity.
Tax Incentives and Exemptions
All renewable energy property in Colorado is taxable unless specifically exempted under Colorado law.
Community Solar Gardens
Section 39-3-118.7, C.R.S., exempts from the levy and collection of property taxes the percentage of alternating current electricity capacity of a community solar garden that is attributed to residential or governmental subscribers, or to subscribers that are organizations that have been granted property tax exemptions pursuant to §§ 39-3-106 to 39-3-113.5, C.R.S. This exemption covers tax years beginning January 1, 2015 and ending before January 1, 2021.
Residential Renewable Energy
Renewable energy personal property that is located on a residential classified property, owned by the residential property owner, and produces energy that is used by the residential property is exempt from Colorado property taxation. Note that this exemption only applies to the renewable energy personal property and not the underlying real property. The Division recommends that the county assessor conduct an analysis of the residential sales with and without renewable energy personal property in each economic area, during each reappraisal year, to determine if renewable energy personal property contributes an incremental increase to the total residential property values. If it is determined that they do, then those sales that include exempt residential renewable energy personal property should be adjusted to exclude the contributory value of the renewable energy personal property.
Independently owned residential solar electric generation facilities (photovoltaic solar systems) that meet criteria listed in § 39-1-102 (6.8), C.R.S. are exempt from Colorado property taxation under § 39-3-102, C.R.S. To qualify for the exemption the solar electric generation facility must be located on residential real property, used to produce electricity from solar energy primarily for use in the residential improvements, and have a production capacity of no more than one hundred (100) kilowatts of AC electricity.
Local Renewable Energy Incentives and Rebates
Colorado does not have any general statewide property tax incentives for renewable energy. However, §§ 30-11-107.3 and 31-20-101.3, C.R.S., allow county and municipal governments to “offer an incentive, in the form of a [county/municipal] property tax or sales tax credit or rebate, to a residential or commercial property owner who installs a renewable energy fixture on his or her residential or commercial property.”
Local governments can enact incentive payments or property tax rebates under certain circumstances related to economic development. A county, municipality, or special district can enter into negotiations for an incentive payment with owners of new business facilities. A county, municipality, or special district may also negotiate an incentive payment or credit with owners of existing business facilities, located in their jurisdiction, based on verifiable documentation demonstrating that there is a substantial risk that the owner of the existing business facility will relocate it out of state. The incentives cannot exceed 100 percent of the personal property taxes paid to the county, municipality, or special district. For agreements made prior to August 6, 2014, the agreement cannot last more than ten years. For agreements made after August 6, 2014, the agreement may not last longer than thirty-five years, §§ 30-11-123, 31-15-903, and 32-1-1702, C.R.S. Additional incentives are available through income tax credits, real property tax incentives, and sales tax refunds. For further information on these incentives refer to §§ 39-30-105 and 107.5, C.R.S.
Other local renewable energy incentives may exist. Contact your local county or municipality for more information.
Sales/Use and Income Tax Incentives
For information on possible sales/use tax or income tax incentives related to renewable energy property, please contact the Colorado Department of Revenue or visit their website.