Have you ever considered installing solar panels in Louisiana, only to be discouraged by the incentives – or lack thereof? I‘m here to show that while the state lags behind others in encouraging renewable energy, residents can still save substantially on solar with the right approach.
An Uphill Battle for Solar Support
First, some background. In 2019, Louisiana allowed our main utility company, Entergy, to gut net metering – our only real solar incentive. Where previously excess solar energy fed to the grid earned homeowners full retail credit, now they only receive the "avoided cost rate" – about 1/4 the value!
This change came about from major utility lobbying when the net metering cap was hit in 2015. Without a state renewable portfolio standard requiring investments in solar and wind power over time, providers have no external pressure to support residential renewable energy.
So where does this leave the Louisiana homeowner interested in solar energy? Well we‘ll have to be resourceful, but the good news is with the sun we see and dropping solar equipment costs, you can still recover your investment in under 9 years.
Use the 30% Federal Solar Tax Credit Before It‘s Gone
Our best opportunity lies with the federal Investment Tax Credit (ITC). Until December 31, 2023, purchasing a solar panel system outright earns you back 30% of total costs as a credit on your federal taxes. This includes panels, inverters, installation labor, any battery storage, wiring and even sales taxes paid.
- For example, on a $15,000 system you‘d receive a $4,500 credit.
- Scale up to a $25,000 system and save $7,500 off the total immediately!
Just note that leased solar systems don’t qualify, and credits drop to 26% in 2024 then 22% in 2025 before ending. So act fast to maximize savings!
Other Ways to Benefit from Solar Power
Besides the federal credit, Louisiana does still offer a few small solar incentives if you know where to look:
Net Metering is still in place, requiring utilities to buy any excess solar electricity you generate. The catch is they now only pay the low “avoided cost” wholesale rate of around 3-4 cents per kWh instead of the retail electricity rate of 12 cents or more. This makes oversizing systems much less economically smart, but with proper planning your annual solar production should align well with your needs.
Property Tax Exemptions mean that although solar will increase your home’s value, Louisiana at least won’t tax you extra for it! Given solar adds around 4% to home values and our 0.525% average property tax rate, you’d pay an extra $210 per year in taxes without this exemption.
Unfortunately Louisiana has never offered state tax credits or rebates for solar installations, and makes no requirements for utilities to invest more heavily in renewables through a Renewable Portfolio Standard (RPS). But from an individual homeowner perspective, installing solar in Louisiana can still pay for itself!
To Lease or Not To Lease?
Since upfront costs can deter some homeowners from buying solar panels outright even with the 30% federal tax credit, leasing through a 3rd party ownership model has become popular. How do the numbers stack up in Louisiana?
- 20 year estimated costs
- System Purchase (after tax credit): $17,850
- System Lease: $32,400
- Monthly Cost
- Purchase Loan: $70
- Typical lease: $135
While leased systems do avoid upfront payments and equipment maintenance, they cost almost double over the lifetime of the panels. Given Louisiana’s very limited extra solar incentives for leasing companies to pass on to you through lease savings, buying outright is strongly advised if possible.
Over 20-25 years, homeowners could save nearly $30,000 when producing their own solar electricity compared to non-renewable utility costs in the state – making the 9 year payoff point very appealing!
| Incentive | Overview |
|---|---|
| Federal Solar Tax Credit | 30% refund through 2023, then phased down before ending 2025 |
| State Tax Credits/Rebates | None |
| Solar Renewable Energy Certificates | None |
| Net Metering | Available but only at "avoided cost" rate |
| Renewable Portfolio Standard | No RPS program |
| Property Tax Increase Exemption | 100% (solar has no impact) |
| Sales Tax Exemption | None |
I know Louisiana hasn‘t historically been the most solar-friendly state, but there are still real savings to unlock! Let the above overview guide you in maximizing incentives available now, before they expire or are phased out.
If interested in related topics to help Louisiana fully embrace the technology era, I recommend checking out these additional articles:
- Cost Saving Tips for Owning an EV in Louisiana
- Top New Technology Companies Based in Louisiana
- Solar Incentive Programs in Neighboring Southern States
Wishing you sunny days ahead in Louisiana! Let me know if you have any other questions.
