Your 2019 guide to getting solar panels for your home in Louisiana
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Louisiana home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
Over the past few years, solar policy in Louisiana has been a bit stop-and-go. And as of right now, it's full STOP. The state has ended the former solar tax credit that was VERY successful, and net metering is no longer something solar owners can expect. For 2017, we cannot recommend going solar in Louisiana, unless the other benefits of solar ownership are worth thusands of dollars to you.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Louisiana solar incentives you see below.
The Solar Strategy section is focused on the 3 ways of paying for solar in Louisiana, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Louisiana. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Louisiana.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Louisiana Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Louisiana|
|Solar Loans in Louisiana|
|Solar PPAs in Louisiana|
|Solar Purchase Payback Time in Louisiana|
|Louisiana Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Louisiana
Figuring out the best way to go solar in Louisiana can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Louisiana
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. Before you scroll down, we'll get right to the point: unless you're willing to sink thousands of dollars into solar with little hope of a finacnial return, Louisiana is not a good place to invest in panels for your home.
Read more below about each of three options for solar in Louisiana.
Option 1: Paying cash for solar
Paying up front used to be the only way to get panels on your roof, and it's still the option that allows you the most control. But it isn't the best option from a percentage return on investment standpoint—that award goes to the solar loan option.
Still, an outright purchase means you own the system from day one and reap the benefits. You get the 30% Federal solar tax credit and electricity savings to bring your first-year costs way down. The trouble is, in Louisiana, these benefits are environmental; not financial.
In our example, you put down $20,000, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced more than $5,200 in income. But that late income makes the system not worth its cost, compared to an alternative investment. Check out the NPV:
Net Present Value: -$4,129
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Louisiana's -$4,129 NPV on a 5-kW solar system means you'd be that much better off investing your money in stocks over 25 years than solar. Electricity is just so cheap in Louisiana right now, a solar system for you home isn't a good investment unless the environmental benefits are worth at least $4,129 to you.
Here’s how the numbers work for a Louisiana solar purchase of a 5-kW rooftop solar system:
- Installing a typical 5-kW solar system should start at about $20,000.
- The Feds calculate their 30% tax credit based on actual out of pocket costs, so you'll get $6,000 back as a tax credit, for a new price (after year 1) of $14,000. Note: you can take the credit over as many years as necessary if you don't owe $6,000 in Federal taxes this year.
- Next, you'll subtract your first-year energy savings, which will add up to about $544, bringing your cost after the first year to $13,456. Those savings will continue for the life of your system, and will only get bigger over time, considering that utility companies raise their rates 3.5% annually on average.
- By the time your system pays itself back in year 20, you’ll be seeing over $900 per year in savings until the end of your 25-year warranty.
- When all is said and done, our estimate shows a total net profit of $5,261, with an internal rate of return of 2.5%. That's not even half as good as a 25-year investment in the stock market, which means solar isn't the best investment option—but it is a way to make a little money while doing good for the environment.
- On top of those returns, your home's value just increased by just about $14,000, too (your expected annual electricity savings over 20 years)!
- And speaking of doing good for the environment... your system will create some green for the earth by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 101 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Louisiana. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
Usually, this is where we tell you that taking a loan for solar panels is a no-brainer, because it means investing in an income-generating asset. And technically, that's true in Louisiana, too. It's just not a sure-thing like it is in other states, because Louisiana has some of the lowest electricity prices in the nation, and the savings aren't as great.
As you can see from the chart above, you'll start out with a big windfall, because with a loan, you're not putting any money down, and you get the Federal 30% tax credit for the whole installed cost of your system. Then, over the 15-year repayment term of your loan, you'll be spending more than you're saving in electricity costs, to the tune of about $1,000 per year until you pay the loan off.
After that, you'll save over $800 per year in electricity costs from your paid-for solar panels, but by the end of the system's 25-year warranty, you still won't have broken even. That means a solar investment like this in Louisiana will cost rather than save you money over the long term.
Net Present Value: -$2,503
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Louisiana's -$2,503 NPV on a solar loan means you'd be that much better off investing your money in stocks over 25 years than solar. We believe in the environmental benefits of solar, but $2,503 is a lot of money to pay for something that usually saves you money over the long term.
Here’s how the numbers pencil out for a Louisiana solar purchase with a solar loan:
- Installing a typical 5-kW solar system should start at about $20,000. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $544, but your loan payments will total $1,775, for a difference of $1,231, or about $102 per month.
- That's not so bad when you consider your tax savings for the year will be $6,000! You'll come out nearly $4,800 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- When your loan’s paid off after year 15, you’ll start see over $800 year in savings until the end of your system’s life.
- Still, at the end of your 25-year panel warranty, you'll be in the hole about $1,400. That's not a huge amount of money, but considering what you could have made from an alternative investment, it ain't pretty.
- If you decide the cost is worth it, the environmental benefits might make you smile a little. Operating your system will take as much carbon out of the air as planting 101 trees every year!
Keep in mind, the numbers above are based on an average home in Louisiana. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
Louisiana does not offer solar Power Purchase Agreements or leases. Perhaps it would be a good idea to contact a solar advocacy organization and ask them to fight for solar in your state!
Louisiana Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Louisiana:
A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels. 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.
An RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding the transition to lower electric bills and offering incentives to put solar on roofs is because the state forces them to. Without an RPS, Louisiana is missing opportunities to help homeowners take advantage of clean, reliable solar power.
Even without a strong RPS, there is still good reason to go solar in LA. Read on to find out why.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting 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.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
The best states for solar mandate that a certain percentage of the RPS comes directly from solar energy. Without a mandatory RPS in Louisiana, this is another area that falls short. If an RPS contains specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you see even stronger incentives for residential solar power.
What's a solar set aside? A solar set aside 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 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 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Louisiana Electricity Prices
Louisiana pays just 9 cents per kWh for electricity—the cheapest rate in the nation. 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.
Most of our electricity still comes from burning millions of tons of fossil fuels. The cost of those fossil fuels in dollars and cents may be low (for now), but the environmental costs are astronomically high. New regulations on carbon emissions and dwindling supplies will likely drive the cost up over the next few decades. But while everyone else is paying through the nose for the fuels of the past, you’ll be rocking that sweet, shiny solar power system on your roof, and making money! Just remember to thank us.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, 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.
Louisiana Net Metering
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.
Unfortunately, Louisiana’s net metering rules are kind of a joke. Arbitrary net metering caps here mean new solar owners can only expect to receive half-price for any kilowatt-hours they don't use to power their own home. Until the legislature gets this figured out, the state is a bad, bad place for new home solar.
What is 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.
Louisiana Interconnection Rules
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.
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.
Solar Incentives in Louisiana
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Louisiana measures up:
Louisiana Solar Power 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.
How do solar rebates work? 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.
Louisiana Solar Power Tax Credits
This is where Louisiana used to shine, but no longer. The state once offered huge solar income tax credits that cut people a CHECK for any portion over their tax bill. It made going solar here a really good idea, but the gravy train has been parked in the garage, disassembled, and sold for scrap. No more tax credits mean Louisiana's solar industry is all but dead.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
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.
Solar Power Performance Payments
Again, without an RPS, there is little incentive for utility companies to pay a premium for solar. That holds as true in the bayou as it does in the desert.
Explanation of 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 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.
We've got a great article if you like to read more about what SRECs are and how to earn them.
Property Tax Exemption
Louisiana also offers tax exemptions to help make solar power more attractive. You are 100% exempt from all property taxes associated with the increase in home value caused by installing a solar power system. And there is an increase. That’s going to save you a pretty nice chunk of change every year.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you own the system and are not leasing). Other studies seem to indicate a home price premium about equal to solar panel cost, minus any incentives like the federal solar tax credit.
For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. 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. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".
Sales Tax Exemption
Unfortunately, there is no sales tax exemption here, meaning you’ll pay an extra 4% up front on the cost of your system.
What's the deal with solar power sales tax exemptions? 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).
The consensus on Louisiana solar power rebates and incentives
The Louisiana legislature has provided one excellent way for homeowners to take advantage of the benefits of solar power. It was a forward-thinking move, but without any more formalized laws that require utilities to source their electricity from renewable sources, it’s easy to reverse course on the benefits of the tax credit. If the tax credit were to lapse, Louisiana would be a big “F.” Based on the big picture, we had to give it a “D.”
With that big, big tax credit still rolling, however, Louisiana is a great state for solar for now. Laissez les bon temps rouler!
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!