Electric Bill Before Solar
Electric Bill After Solar
Est. Solar Payment
Here's a typical electric bill before even considering solar panels. That's a nasty outlay of cash. Imagine what you could do with all that immediate savings above every month.
Doesn't this look a little better? Yes, of course it does. Imagine getting this bill in the mail instead. Whew!
Now, while you have a drastically cut back power bill, you now have a solar lease payment. Essentially, you're renting out your rooftop to a company who then pimps it out with solar panels. Then, you pay a lease payment to them for the power it produces. In each case, this payment added to your existing power bill will be lower than your previous bill, netting you instant savings with nothing down out of pocket! How awesome is that?!
Leasing vs. Investing in Home Solar
To lease, or not to lease? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Additionally, if you go the leasing route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar leasing company (after all, that's how they can afford to give you such a no-brainer proposition in the first place). A discussion of the performance payments follows.
What's an RPS you ask? State legislatures pave the way for strong solar energy incentives to flourish. How? By stipulating standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS).
If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
RPS solar carve out
A solar “set aside” is a mandate the state sets in its RPS. This guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and as you can see above, some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2020. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2020. Pretty good. However, New Jersey also has a specific solar set aside of 2% by 2021. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is the hottest solar market right now!
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
The states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
State Solar Rebates
Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
State Solar Tax Credits
50% of the first $25,000 of the cost of each system Leased systems installed after December 31, 2013: 38% of the first $25,000 of the cost of each system Maximum Incentive: $12,500 per installed system; 1 installed system per residence
While state tax credits are not technically free money, they can be an important factor consider, especially if you have some personal tax liability. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
State Solar Property Tax Exemption
Property tax exemption status is a pretty big factor when putting together your investment considerations. Solar will add approximately twenty times your annual electricity bill savings immediately to the value of your home upon installation. for many 5kW systems, that amounts to about $20,000. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade
State Solar Sales Tax Exemption
When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
State Net Metering
Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Solar Performance Payments
Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
5kw Solar System Purchase Payback Time
If you decide not to go with the leasing option, we've calculated the amount of time it would take for your home solar panel system to pay for itself if you put up the cost of the install out of pocket or financed it yourself. This calculation takes into account all the rest of the incentives below, and assumes you meet all the criteria to take advantage of them (e.g. - having a tax appetite, south facing roof with limited shade, etc.)
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Welcome to the Louisiana solar power information page – Details Section
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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) Renewables 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.
Louisiana Solar Power Performance Payments Rebates
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 Power Tax Credits
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.
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%.
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.
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.
Example 5kW (5000 Watt DC STC) Solar System 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.
The consensus on Louisiana solar power rebates and incentives
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!
Our older archived X Solar Power costs and savings breakdown images for reference: