Investing in solar energy would be the next best thing to acquire, whether for business or home use. Not only are you conserving electric energy, but you are also helping humanity generate renewable energy that could re-cultivate our planet from climate change.
Were you aware that Louisiana receives more sunshine than the national average in the United States? However, despite this fact, the state is ranked 38th in installed solar capacity due to its low electricity cost and limited solar incentives. As per EIA or the U.S. Energy Information Administration, Louisiana has a relatively cheap electricity rate of 14.10 cents per kilowatt hour, slightly higher than 11.69 cents per kilowatt hour a year ago. Additionally, the Solar Energy Industries Association (SEIA) reports that Louisiana generates less than 0.43% of its energy from solar power, with only 20,500 households powered by solar energy.
Back in 2016, Louisiana provided a desirable tax credit of 50%, which could result in savings of up to $12,500 for those who installed solar panels, even before applying for the federal tax credit. The combination of these incentives made it an effortless decision for many property owners in Louisiana to switch to solar power and take advantage of the available rebates and incentives.
The most substantial solar incentive in Union, Justice, and Confidence, Louisiana, comes from the federal tax credit, property owners can still enroll in net metering and use the state's solar property tax exemption to keep costs low, despite an increase in their property's value. For additional information regarding Louisiana solar incentives, please continue reading below.
Initially, Louisiana had a mandatory net metering policy, but it was eliminated in 2019. Presently, utilities can provide net metering as part of their solar incentives, but it’s not obligatory by law. Under the existing framework, only a few utilities offer net metering at a reduced buy-back rate.
For example, Entergy's Louisiana customers who installed home solar after December 31, 2019, are charged under Rider Schedule DG. This tariff uses a two-channel billing approach, where customers pay the retail rate for all electricity (in kWh) purchased from the utility but only receive credit at the current avoided cost rate for excess energy exported to the grid. As of April 1, 2022, the current buy-back rate was approximately $0.0368.
Customers are still subject to a fixed customer charge or minimum bill, with any leftover bill credits carried over to the following month's bill under the Entergy tariff. Customers who have unused credits at the end of the annual billing cycle will be paid by the utility company for the credit balance at the avoided cost rate.
Adding a solar system to your home in Louisiana will not result in a reassessment of your property's value. Thanks to the property tax exemption law, solar panels and heating equipment are considered personal property exempt from ad valorem taxation. As a result, assessors are prohibited from factoring in the value of solar arrays when determining a building's taxable value. This means that your property taxes will remain unchanged, and you will continue to pay taxes based on the property's value before the solar system was installed.
While Louisiana may lack state solar incentives for residential solar installations, property owners can still benefit from a property tax exemption and net metering compensation. On top of these incentives, a significant Federal tax credit is available. The Solar ITC or Investment Tax Credit is worth 26% of the system's total cost and can be deducted from the taxpayer's federal income tax. However, only those who purchase their system through cash or loan are eligible for this credit, not those who lease. If you lease a system, the incentives will go to the third-party owner. Therefore, purchasing a solar system rather than leasing one is wise.
EnergyBillCruncher is an unbiased and free online resource created to benefit homeowners. Join our newsletter & stay up-to-date with the latest solar news.