Louisiana Solar Power Rebates, Tax Credits, and Incentives
A beautiful day for a stroll in the French Quarter
2012 Update
Solar policy in Louisiana is a bit stop-and-go. More policies and incentives are missing than we’re used to in a state with costs as low and payback time frames as short as they are here. Most of that low cost and quick payback is due to the MASSIVE personal tax credit available for installing a residential solar power system. While relying so heavily on one incentive makes us worry just a bit, the tax credit is SO huge that it pretty much makes up for everything else. Read on to find out the details of that tax credit and all of the other solar policies and incentives here …
Louisiana’s (Lack Of A) Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. If you keep up with renewable energy policy, you already know that a great many states have passed such Standards. Many of the RPS’ mandate goals as high as 30%, even 40% production in the not-that-distant future.
Typically you can tell how strong a state’s solar incentives are just by looking at the RPS. A strong RPS means strong rebates and other cash incentives. A weak, or worse, no RPS at all generally means little to no incentives for solar power.
Fortunately that’s not the case here, thanks to that tax credit we’ll get to in a second. But even still, a strong RPS could help shift some of the cost of incentivizing solar power to the utility companies that are still chugging along on fossil-fuel based power.
Solar Performance Payments and Utility Rebates in Louisiana
Like we said, this is where you really see the effect of having no RPS here. Without mandatory minimum levels of renewable energy, the utility companies are happy to keep relying on all those fossil fuels so long as the profits keep coming in. If they have no incentives to encourage solar power, the utilities aren’t very motivated to give you any incentives either. That’s why there are no performance payments or utility rebates available here.
Louisiana Solar State Tax Credits
But now the trump card … In short, Louisiana has one of the best state solar power tax credits in the Nation. Half. They give you half. Wow. Even Brad Pitt is all over it :-).
That’s 50% of the cost off your system up to $12,500. If you don’t owe that much in state tax you get a CHECK. Also, the $12,500 cap is PER SYSTEM so you could duplicate it if you have multiple meters to solar up.
Solar Tax Exemptions in Louisiana
Louisiana has a 100% property tax exemption for all solar power systems. See, when you install a solar power system in your home, you add thousands of dollars of value (we’ll get to how many thousands in just a minute). Normally that would mean more taxes every year. But thanks to this 1994 law, you won’t pay a dime.
All that’s missing from the state tax code is the matching sales tax exemption. While it may seem like small change compared to that massive credit and the property tax exemption, we’d still like to see you save that extra 4%.
Utility Prices in Louisiana
Louisiana pays an average of 8.12 cents per kilowatt-hour of electricity. That’s cheap. The cheapest in the national by a pretty wide margin, in fact. Cheap electricity rates mean you’re probably not feeling too much of a strain in your pocketbook …. yet. Just don’t forget why electricity is so cheap.
That’s right, fossil fuels. Lots and lots on non-renewable, greenhouse gas producing fossil fuels. Down here in The Bayou State, we know all too well about the potential costs of fossil fuels, especially all that drilling out in the Gulf. When all those fossil fuels really start to bite us in the butt, or start to run low … or both … electricity rates are going to rise, and fast. When that happens you’re going to be really, really happy you switched early to all that efficient, clean solar power that will be in high demand. Remember, when there’s a solar energy spill, you just call it a nice day.
In the meantime, solar power will still save you a chunk of change here. We’ll go over just how much in a minute.
Louisiana Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. Louisiana’s net metering rules , established in 2005, cover residential systems up to 25kW and commercial systems up to 300kW. Net excess power generated gets credited to your next bill at the full retail rate. Unlike many other states, Louisiana’s net metering program contains no limits; your credits continue to build indefinitely, and are never relinquished back to the utility for non-use over time. For the final month in which you take service from the utility, the utility will pay you for the balance of any credit at the utility’s avoided-cost rate.
The one real downside to Louisiana’s net metering program is that not everybody can get into the program and meet all of their on-site generation needs. We’d like to see the aggregate capacity limit (i.e. what percentage of electricity can be generated from net metered systems) be raised from the current 0.5%. The system size limit should also be raised for commercial and industrial customers to let the largest potential users meet all of their generation needs via solar power.
We gave net metering a mediocre overall grade here because of those small cap sizes. That said, if you live in an area where aggregate capacity limits are not an issue, you shouldn’t have any problems taking full advantage of net metering as a residential customer.
Louisiana’s net metering law includes basic interconnection requirements, but does not establish any set any actual interconnection rules beyond those basic safety compliance requirements. As a result, there is no standard interconnection process here. The net metering law does not address insurance requirements. Sadly the law does require a redundant external disconnect switch, though many inverter-based systems (as yours almost certainly will be) can qualify for an exemption if other safety shutdown features are in place.
5kW Example Return on Investment in Louisiana
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW solar system should start at about $25,000. Don’t freak – that’s gonna drop really, really fast with two massive tax credits coming.
- Let’s start by subtracting the state tax credit. You’re getting the max, so subtract $12,500, for a new price of … yep … $12,500.
- The federal tax credit gets calculated based on out of pocket costs. Since that state tax credit is not an up-front rebate, you get to calculate the federal tax credit based on the full $25,000 price tag. Subtract another $7,500 for a new price of $5,000.
- Finally we subtract your first year’s energy savings, which we estimate to be about $507. That brings your final cost after the first year to an absurdly low $4,493. That’s more than 82% off the sticker price, and the lowest cost after year 1 we’ve seen in the entire country.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in just 8 short years. After that you’ll be turning a profit to the tune of nearly 20 grand over the life of your system.
- In addition to those direct wallet-fattening savings, you also increased your home value by $10,134.
- On top from all that green in your pocket, you’ve created a bunch of green for the planet; 110 trees worth, every year your solar power system is humming, and you’re not buying fossil-fuel based electricity.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you.
Louisiana Solar Consensus
The Louisiana legislature has promoted clean energy big time. It seems they’re spearheading a whole new market considering all the reconstruction that needs to be done. These incentives for installing solar electricity and hot water systems are going a long way toward reinvigorating the local economy. Now is the time to get moving on solar power. Get a quote below! laissez les bons temps rouler!
Click here to get hooked up with a local solar installer for your home or business
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With the present Solar units lifespan of 20 years then the “years to break even” figure of 26 years doesn’t give much credence to install such a system… “green house” gas or not!
The cost is still to high… maybe if the life of a system was 50 years.
Hi Chris, Systems can possibly last 50 years.. there are no moving parts and the PV panels themselves are made of inert Silicon. The inverter will probably not make it that long, but if replaced, you could seriously get power our of your system for that long. We have systems we did 30 years ago that are still kicking.
Also, Louisiana will need some new subsidies, but the payback period is probably not 26 years unless you have very low electrical usage and maybe some shading issues. It’s best to get a quote and see what the scoop is.
I agree, the credits you get don’t really help much. I’ve looked into this and wait and see how things work out.Also you have to hope nothing breaks/i.e. hurricanes, weather in general
If you include the fact that the systems themselves have value, the ROI is really day one. Without that, it is about 15.5 years.
With thermal, the ROI again, if you figure the equipment is worth at least $1,000, is less than one year.
PS…you also have to figure that energy rates will not stay the same in the future. So you need to add about 5%/year minimum to whatever you are paying now to figure ROI.
Butler Ives
South Coast Solar
New Orleans, La
I am about to rebuild my home that I lost to Katrina and will be rebuilding about 1300sq.ft. does anyone have an idea what size solar system that I would need and if it would make since to invest that kind of money on such a small place?
When are solar power companies going to move from panels to the commercially available roll on solar films?
To answer Johns question about “solar film”… we’ve been offering solar laminate for people with sloped metal roofs or flat roofs for years. The problem is that most homes have shingle roofs and film will not stick to them. Thin film is about half the efficiency of modules so it will take twice the area for the same power.
If the costs came down to earth on the equipment and installation, thousands more people would be able to afford this product. The up front cost makes it almost impossible to think about making solar power a reality instead of just talk and speculation about its benefits.
Let’s get the costs down, make this an easy choice for people everywhere wanting to use solar power for their residences and commercial property, reduce greenhouse gases, and put the big power companies out of business.
The Chevy Volt electric (mostly)car in late 2010 changes the economics for me. Solar can charge my house system batteries by day and then time shift my solar power to charge my car batteries at night. The pay back on something like this, while difficult to calculate, certainly passes my “gut check” logic.
Ed, if initial costs are your concern, you should really consider Solar Thermal for heating the water in your home.
Our systems sell for a little less than $8,000, and with the tax credits, your out of pocket is less than $2000.
You’re going to have to pay taxes anyway, so just take the money you’ve saved for that, put it towards thermal now, and by the time tax season rolls around you might have already paid for 1/2 of it!
Email us if you are interested @ info@southcoastsolar.com
It is an affordable way to “go” solar.
Butler Ives
Director of Sales & Marketing
South Coast Solar, LLC
New Orleans, La
A little correction, above it states that a typical 3kw system in New Orleans installed is $58,500..THIS IS NOT CORRECT.
A typical 3kw system, installed, by a good, professional solar energy contractor, should run less than $25,000..installed..with NO SALES TAX ADDED.
Especially if we ( South Coast Solar) do it for you!!
By the way, I’ve heard that some companies are charging people sales tax. ( you know who you are) This is NOT LEGAL. Call the la dept of revenue and ask them if an improvement to your home ( which is considered immovable) can have sales tax charged.
South Coast Solar is setting the bar in Louisiana for the most honest, dependable solar installations possible.
In the gulf south solar is relatively new, so be sure to do your homework, ask a lot of questions, and pay close attention to the smell test.
Don’t pay sales tax, don’t pay for a site visit, and make sure that when a company tells you how much energy a system will generate, they include things such as inverter inefficiencies, solar haze, dust on the collectors, etc.
Also, check to make sure they have workers comp and general liability insurance.
Butler Ives
I have a small double wide mobile home in the country. My current elec usage is @ 1400 KWH per month. How much would a turn-key setup cost? My address is 9881 Highway 159 Shongaloo LA 71072
South Coast Solar is the solar provider for my environmental consulting firm:
Phoenix Environmental Group
http://www.phoenixenvironmentalgroup.com
In addition to implementing solar systems, I would highly recommend a “green audit” to identify other energy efficiency measures for the home or business to maximize energy savings.
I am buying a home and I am interested in installing solar panels. I live in New Orleans and will buy home in six months.
My annual electricity cost are now at 4000.00 average . I live in Ferriday LA 71334 and my home is about 3400 square feet living space. Is there such a thing as a whole house system. Seems if I save 4000 annually plus the tax credits it may be worth it to do it. Pat Hazlip
We live in Monroe, LA. Do you work in northeast LA?
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For more info:
http://www.gosolarlafayette.com
Is this SCS site?
Collin,
What is SCS?
What about consumer financing? What if you don’t have equity in your home ? Is there a company that will do direct lending ? If so, what is the name of the company ?
Butler,
The Energy Information Administration predicts energy cost will decrease year over year between now and 2015. If you are going to advertise South Cost on this board, make sure you are offering your customers a proper economic analysis.
Jeff,
Thin Film in the photovoltaic industry does not refer to solar laminate. It refers to 2nd generation Copper-Indium products that will drastically reduce solar material costs. Some manufacturers also use it to refer to amorphous polysilicone and nickel based modules which have some decrease in material costs.
All,
The solar industry experienced impressive product changes in 2008, which will continue into 2009. If you need specific advice on what solar products are best for Louisiana’s rebate program, I am happy to help. My email is jcromer@greencityaustin.com.
JR,
One of the products we sell is called “Thin Film” by the manufacturer so that’s why we call it that. See http://www.uni-solar.com/
The Department of Energy website is estimating a 10% annual increase in energy costs. I guess you can predict whatever you want.
If your company needs any product give us a shout! http://www.gulfsouthsolar.com
have there been any solar arrays installed in louisiana, not associated with a specific business or building. an array for the sole purpose of selling energy back to the grid??
Just to let you know, the net-metering rule for commercial has a limit now of 300kw. Here is a link to a news article about it http://blog.nola.com/tpmoney/2008/08/the_state_has_increased_the_ma.html.
if you can not sell the over produced energy for cash why bother?
When you pay your electric bill you pay them cash. The more power they have to use from your system the less cash you have to pay them. The main reason they give you a credit instead of cash is because you will usually use more power from them than they will from you, unless you have a large stand alone system, which you don’t have.
My house is approx. 1800 sq.ft. I had my electric company fax me my monthly usages for last year. The maximum monthly KWH was 3899 and 128 KWH/Day. What size system would I need and What kind of cost am I looking out? Do I file for the rebates or do you file for them and have them sent directly to you?
I have a concern in the MATH being used in these examples. The above cost analogy uses a “federasl tax credit” of $8100 and they say your out of pocket net will be $5400. Isn’t a tax credit an amount you take off your taxes at the end of the year, an amount you don’t pay taxes on? If so, then then the MATH should be a net of $13,500 and a tax break of $8100 you don’t have to pay taxes on at years end.
Mr Rushing your on the right track…
But i will bet that you will pay the whole bill then get your percentages, when you can pry them from their cold dead hands…
Also I agree with you I feel we should be given cash for the entergy we produce not a credit if and when we use it… and if we are suppling them we also should not be charge the default fee for being connected… Now to be fair we should only collect the current wholesale rate for the excess produced.
e…
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I was giving consideration to solar instead of natural gas generator for storms. My house is 2600sq.ft. and mother in law apt. in back is 500sq.ft. I’d need 22kw. With tax incentives where they are and cost no way. Plus I guess panels are too fragile. Are tax breaks a one time thing or can you get additional tax breaks next year if you expand system?
I agree Keith. Solar for alternative energy is great, but not good as a power outage alternative. You would need a very large system with a battery back up hybrid inverter for it to work. A net meter type solar system would not function during a power outage because it does depend on the grid.
Whenever additional incentives such as cash rebates, prizes or gift certificates are offered in addition to the tax credit, the eligible cost must be reduced by the value of the incentive received.
If you wish to be able to use the Solar system when the Grid system is down you will need a battery system, a charge controller, an off grid inverter and at least a manual switch to disconnect from the Grid. Most people dont want to spend the extra money.
I have 100 acres of farm land. Can I put in several acres of solar panels and sell excess to utility company?
I am considering installing a solar powered attic fan to aid in ventilation of my residential attic space. It seems the fans(either the fan/solar panel combo unit or separate pieces for conversion) cost around $300-400. I’m more saavy with DIY handywork than I am with taxes. I was wondering if it is a simple thing to do with claiming it on my taxes? Is it like getting half of the cost paid for? Is it worth the investment as my roof does have passive ridge vents? I do have a spare vent that looks like a good place to convert with inside mounted fan and an a roof top solar panel. Thanks for any input.
I am not sure your math. $27,000-12,500-8,100=6,400; how do you get $5,400?
The electrical bill is average $55/month assumed, $55×12=$660/yr, how do you get $600 for the first year? and $1,078/mon during 25 year life span? At the begaining you said 20 year to pay its self, how you calculated? why at the end you said 5.5 year to breakeven? How much interest you assumed for the invest? I am interested in solar, but want to have a convencing math for basis. Thanks!
Is the Louisiana state tax credit for solar applied to the total installation costs or only the installation costs minus the federal 30% credit. The estimator on the La. Clean Tech site took off the 30% before calculating the credit.
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In the future, when I have a roof replacement/repair, can the panels be removed temporarily and at a reasonable cost?
Hi Bill,
Yes, you can temporarily remove the panels, re-roof, then reinstall them relatively easily. However, this might cost about $1000-$1500 to do. Before going solar, we recommend having a roof that is no more than 7 years old. If older, it usually makes more financial sense to re-roof before installing the panels. Also, you get better piece of mind knowing everything is top notch above your head.
Before you re-roof, make sure your solar company has agreements with a local roofing company so that you’ll get double warranty in the extremely rare event of a leak. Sometimes, the solar warranty can void the roofer warranty and vice versa. It’s a mess you want to avoid.
Here’s how I see it: Solar is an affordable option because it enjoys generous incentives. Residential systems can earn up to an 80% tax credit – 30% federal and 50% state. Plus, enjoy a 5-year accelerated depreciation scenario, and the savings you’ll get from not paying the utility kinda make it a no-brainer, don’t you think?
Do the panels have to be installed on your roof? It makes me nervous to think about roof repairs/replacement and having to find someone to remove panels and work with roofers to avoid voiding of warranties. It seems like it would be easier and less costly to just install them in the yard.
Depends where you live, but most people lease solar now where the lessor guarantees the performance of the system (much like they would have to fix a leased car if it broke)
serious questions with the upcoming climate change legislation in DC that’s coming down the pike…from what I’ve read, Entergy, LA may want to reconsider its policy and buy all the excess solar and wind that is generated and put on its grid. The only way to make renewables widespread in usage and feasable is to make it profitable for someone who might have extra acerage that they could put a stand-alone system or two on.
When does the Louisiana rebate of 50% expire? When does the Federal rebate of 30% expire?
Has anyone seen Obama’s “Energy-Czar” advocating to people to paint their roofs white? I also had a small company solicit me to do same with an added material to the paint, specifically, very tiny ceramic air filled spheres, reportedly used on space shuttle tiles for added insulation from heat entering roof. It does make sense to me that a light color roof would result in much less heat absorption in attic, as it would reflect sun, any thoughts, experience ? Know this isn’t about solar, but the less cooling you would have to do in South Louisiana would result in less energy needing to be produced.
I will be attending a solar training course in a few months and want to know how good my chance is getting hired at one of Louisiana’s solar companies. I will receive NABCEB’s Entry Level Certificate after the completion of my course. I’m still undecided on taking an intensive, hands-on class at our states community college or taking an online class that lasts several weeks. I hope to eventually become a certified PV installer.
Is solar energy even a profitable career in Louisiana?
Heath,
Entry level NABCEP really doesn’t impress. Its better to be a journeyman or master electrician to enter the industry. The future of installation belongs to electricians (as it should).
We have a free online class at http://www.cleantechtraining.com that offers a good project development overview.
I am a property owner in LA with my primary residence in MS. Are there any restrictions to the LA ‘rebate’ if I add solar panels to my property in LA; but, live out of state? Also, is there a State of LA office that I could contact to ‘double check’ the rebate process?
C
OK, this is 2011, when does the state of LA run out of funds for this 50% rebate and does anyone know for sure how both rebates work to get your refund of 80% any government websites for additional info?
Are the state and federal rebates a one-time deal? If I want to upgrade down the line am I still eligible for the rebates?
I own a small apartment bldg with 4 apartments; one of which I live in. Are there any programs that will help me make the jump to solar?
Hello, in Louisiana, locally, if I have a system shipped in, what is the total cost to have your group do the install?
Currently we are installing solar from a 5k system to 500 k system for no more than 4dollars per watt Therefore a 3 k system will cost 12000 the rebate is 12500 do the math , !
I have solar it’s assume my company did 1 year no interest no payment I did 12 panels one year than 14 2 years ago now 2012 I going off the grid solar is terriffic
Please call me for estmite
Alex, what you want to do is sign up here http://solarpowerrocks.com/free-solar-estimates/ and someone will call you pretty quickly.
Take care,
Dave
Any website information on the white roof paint mentioned?
I put a white roof on my house 6 years ago and it is now black, can’t pressure wash white sanded asphalt roofing, bleach turns it orange-yellow. The new paint needs anti microbial additives, as should any white roofing.
Sorry Roger I don’t know too much about white roofs, but it sounds like a pressure washing is in order like you already thought about, maybe just use water and not bleach and see how it goes?
I will be installing solar panels in about 2 weeks also will be doing th spray foam which also qualifies for a fed. rebate. Everybody it is a smart move get with you CPA, like i did, have them run the numbers and i guarantee you will see the light.
Can someone update me on what is going to happen in Louisiana next year in terms of solar. I just bought a house in New Orleans, I replaced the entire air conditioning system without any rebates. I also replaced all windows with double pane and I could not find any incentives. I know there are some tax incentives for solar now but I wonder what the situation will be like next year when I can afford the investment. I work for a solar company so I have access to inexpensive equipment. Thanks!
Chuck, I’m from Louisiana and so is my girlfriend. I don’t live there so I’m not 100% up, but last I checked about a year ago, you could get a 50% state tax credit that you could add to the 30% federal tax credit, and the state tax credit was refundable (you don’t even need the tax hunger to take advantage of it).
but, I’m not a tax pro so consult one please
Neal Estay
I’ve installed a 12.5 kw system on my house 3 months ago. My electric bill for those 3 months has been ZERO. I also banked 1839 KWh since i turned them on for future use. They will with stand winds up to 130 miles an hour. My panels are guareented to produce 97% of thier power for the 1st 13yrs. and 80% up to 30 yrs. and my micro invertors are guareented for 25 yrs…i’ll have my money back in 6 1/2yrs. I’m getting $29,000 back from state and
$14,880 back from fed. this year ..i’ll get the rest of my money back from fed. next year($4,091). You have up to 6 yrs. to get your money back from feds….TO ME IT’S A WIN..WIN ..SITUAITON