Louisiana Solar Rebates, Incentives and Tax Credits

Random fact: Louisiana is the only state with a large population of Cajuns, descendants of the Acadians who were driven out of Canada in the 1700s because they wouldn’t pledge allegiance to the King of England.

So now let’s talk about Louisiana solar and there is much to talk about. In 2007, the Louisiana legislature passed Act 371, which grants a tax credit to anyone who installs a home solar power system. The details of the credit are below but there is a great bonus that I want to highlight. If the tax credit exceeds what you owe in taxes, the state will mail you a check for the difference – now that is an incentive.

Net-Metering

Louisiana does have a net-metering program that covers residential systems up to 25kW and commercial systems up to 300kW. All excess electricity generated is credited to your next bill. A bonus feature is that Louisiana has no limit on the amount credited and the credits continue indefinitely. Customers are paid the wholesale rate for any net excess power generated when they cancel service.  Remember however, you are only eligible to receive energy credits and won’t be paid for the excess solar energy you generate. Therefore, you will want to size your system to only offset your current or planned electricity needs.

 
PACE Financing
Louisiana has authorized certain local governments to establish such programs, as described below. (Not all local governments in Louisiana offer PACE financing; contact your local government to find out if it has established a PACE financing program.

 

Personal Tax Credit

Yes Louisiana provides a tax credit for the purchase and installation of a home solar power system, purchased and installed on or after January 1, 2008. This credit can be applied to personal, but the system must be installed at either a residence or a residential rental apartment complex to be eligible. In July 2009 the credit was extended to taxpayers that purchase and install systems rather than only the owners of the residential property. This legislation also clarifies that only one credit can be taken per system, so if the property is sold, the taxpayer who originally claimed the credit must disclose this, as the new owner will not be eligible for another tax credit on the same system.

 

The amount of the credit is equal to 50% of the first $25,000 of the cost of each system, including installation costs (unless the taxpayer is installing the system)

This tax credit may be combined with any federal tax incentive, but it may not be combined with any other state tax incentive.

 

Property Tax Exemption

In Louisiana, any equipment attached to an owner-occupied residential building or swimming pool as part of a solar energy system is considered personal property that is exempt from taxation. In other words when the property assessor comes knocking, the value of a solar energy system will not be included in the assessment.

 

Home Energy Loan Program

The Home Energy Loan Program (HELP), administered by the Louisiana Department of Natural Resources (DNR), allows you to get a five-year loan to improve the energy efficiency of their existing home. DNR subsidizes 50% of the financing for energy efficiency improvements at a low interest rate to participating lenders, up to a maximum of $6,000. Each participating lender sets the maximum loan amount offered to you, as well as the interest rate that is charged.  You can qualify for an energy improvement loan in two ways:

1.    Either through an energy audit in which a Energy Home Rater makes recommendations, or

2.    By choosing pre-approved home improvements as designated by the program.

 

In order to participate, you must contact a participating lender directly and must complete a credit application. The HELP home improvement loans may either be consumer loans or second mortgages; this is left to the discretion of the participating lender. The list of participating lenders and pre-approved home improvements is available here.

 

Example

LocationNew Orleans
Av. Monthly Electricity Bill$100
System Size5.12 kW
% of total electricity use generated from solar70
Cost / Watt (installed)$7.00
Cost Breakdown
Total Cost$35,840
Rebates
LA State Tax Credit$12,500
Federal Tax Incentive$10,752
NET COST$12,588
Cash Flow
New Av. Monthly Electric Bill$30
Monthly Loan Payment$84 (30 year loan at 7% interest, 0 down)
Tax Saving (assuming married filing jointly, $140K income)$26*
Payback period7.4 years
NEW MONTHLY NET COST$88

* Tax savings will decrease as the principal is paid down. Please consult your tax preparer.


 

That’s $12 less per month. Sound like a good deal? Have a Louisiana solar installer give you a detailed quote so that you can find out how much you could save by going solar.