Louisiana Solar Rebates and Incentives

How Much Can You Save on Solar in Louisiana?

• The Solar Tax Credit program in Louisiana provides a credit on federal taxes
• Residents must submit a net metering agreement to enroll for NEM in Louisiana.
• Property owners in Lousiana may be eligible for property tax exemptions
• The Home Energy Loan Program (HELP) offers low-interest loans up to $12,000 with repayment terms of up to five years.

Louisiana Energy Profile

Louisiana receives an average of 4,725 kilojoules of sunlight yearly. The Creole State is well-suited for solar energy production and has a growing number of solar installations. According to the Solar Energy Industries Association (SEIA), Louisiana had 216 megawatts (MW) of solar installations, enough to power 20,606 homes in 2023.

Louisiana offers residents multiple solar rebates and incentives to encourage solar energy adoption. These programs reduce the cost of installing solar panels, making solar energy more accessible to the residents.

Federal and State Solar Incentives available in Lousiana

What's the Average Cost of Electricity in Louisiana

Louisiana's average retail cost of grid electricity is around 8.82 cents per kilowatt-hour (kWh). Also, the average cost of solar panels per watt in Louisiana is about $3.16. This cost may vary depending on the type and size of the solar panel array and the installation costs.

The cost of installing a six-kilowatt-hour solar system in Louisiana can vary depending on several factors, such as the panel type, panel size, and installation process. But, on average, a 6 kW system costs about $18,960.

Homeowners installing solar panels can use the Federal Investment Tax Credit (ITC). The government provides a credit of up to 30% of the system's total cost under the ITC.

For example, for a 6 kW system that costs $18,960, the ITC would amount to $5,688, reducing the total cost to $13,272. This tax credit reduces the cost of solar panel installation for homeowners and makes it a more affordable option.

Louisiana also offers solar energy incentives like property tax exemptions. These can further reduce the cost of installing solar panels and help homeowners save money on their energy bills. Hence, homeowners can contribute to a cleaner, more sustainable energy future in the state.

Federal Solar Tax Credit in Louisiana

The Federal Solar Tax Credit program provides a tax credit to homeowners who install solar panels on their property. The program works by providing a credit on federal taxes for a percentage of the cost of the solar panel system.

For example, if a resident owes $5,000 in federal income taxes and claims a $1,000 solar tax credit, they will only owe $4,000 in taxes. ITC applies to expenses on panel, installation, and equipment costs.

The credit aligns with the cost of the solar PV system. However, the rate differs depending on the year of installation. For solar PV systems fixed in 2020 and 2021, the credit was 26% of the cost of the system.

For systems built between 2022 to 2032, it is 30%. The credit will decrease to 26% for systems installed in 2033 and 22% for those in 2034. The tax credit will expire in 2035 unless Congress renews it.

The federal solar tax credit makes solar energy more affordable for homeowners in Louisiana who invest in solar PV systems. By claiming this tax credit, they can offset the upfront costs of getting a solar system.

For example, if a proprietor installs a solar panel system that costs $20,000, they could receive a tax credit of $6,000. This reduction would bring the system's net cost down to $14,000.

Eligibility

To claim the Federal Solar Tax Credit, homeowners must meet the following criteria:

• The solar PV system must be on the property between January 1, 2017, and December 31, 2034.
• Homeowners must install the solar PV system on a property in the United States.
• The property owner must own the solar panels by direct purchase and not through leasing.
• The solar panels must be new and not previously used.
• Residents who invest in a solar community project can also claim ITC if the electricity generated does not exceed their home's electricity usage.

How do I claim the Federal Solar Tax Credit in Louisiana?

To get the Federal Solar Tax Credit in Louisiana, follow these steps:

Step 1: Install a Qualifying Solar Energy System

Homeowners must first install a qualifying solar energy system to claim the Federal Solar Tax Credit. Qualifying arrays include solar panels, water heaters, and other solar energy systems. The system must be new and meet all relevant safety and quality standards.

Step 2: File the Correct Form

Individuals and businesses must file one of the specified Louisiana income tax returns. They include:

• IT-540 or IT-540B for individual income tax
• IT-541 for tax involving an estate or trust
• CIFT-620 for businesses

Step 3: Get Documentation from the Installer

Homeowners must have documents confirming that the system meets the qualifications for the tax credit. The papers should include an invoice showing the cost of the system and any related equipment or installation fees. It should also include information on the system's capacity and efficiency.

Step 4: Fill out IRS Form 5695

The IRS Form 5695 is titled "Solar Energy Income Tax Credit for Individuals and Businesses." This form needs homeowners to provide information about their solar energy system. Residents will also need to add the cost of their tax credit.

Step 5: Submit Form 5695 with your tax return online

Residents must submit their completed Form 5695 online and their federal tax return for installing their system. They should submit via the Louisiana File and Pay Online for personal tax. And the Louisiana Taxpayer Access Point (LaTap) for business taxes.

Net Energy Metering in Louisiana

Net Energy Metering (NEM) is an arrangement that allows homeowners with solar panels to receive credits on their utility bills. They do this for any excess energy they generate and feed back into the grid.

Louisiana NEM is available to customers of investor-owned utilities, such as Entergy Louisiana, SWEPCO, and Cleco. Under NEM, the excess electricity helps reduce homeowners' utility bills owed.

The NEM uses a bi-directional meter to measure the energy the systems generate. It records the electricity and the amount they feed into the grid. The utility company credits the customer's account for the excess electricity they produce at the retail rate.

This credit is the same rate the homeowner would pay to buy electricity from the utility company. At the end of each statement period, the customer's utility bill reflects their net electricity consumption from the grid. This bill will subtract the value of the electricity they sold back to the grid.

The NEM program in Louisiana has some restrictions. These include limits on the size of the system eligible for NEM and the total capacity of NEM systems that can connect to the grid in each utility service area. Also, some utilities have reached their NEM capacity limits, meaning new customers may not be eligible for the program.

Despite these limitations, NEM is a valuable tool for Louisiana homeowners looking to offset their energy costs and reduce their carbon footprint.

How to Enroll for Net Energy metering in Louisiana

Here are the steps to enroll for Net Energy Metering in Louisiana:

Step 1: Meet the regulatory requirements

Homeowners must stick to the regulatory requirements set by the state and their preferred utility company. They must also follow the safety structures of the Underwriters Laboratories Inc. and that of the National Electric Code.

Step 2: Install safety measures

Homeowners must have safety measures to stop the generator from feeding electricity to the utility at an abnormal voltage. This act could cause degrading power quality on the electrical grid. They must also have a labeled manual disconnection approved by the utility on the property. It will help to synchronize the utility.

Step 3: Pay the installation fee

Residents must pay for the costs related to interconnection. These costs include a one-time fee for the installation of the meter and standard charges based on the net kilowatt-hours. An interconnection fee is about $50 for residential homes and $75 for businesses.

Step 4: Submit a net metering agreement

Solar owners must also submit a completed and signed Interconnection Agreement for Net Metering Facilities. This agreement will describe the generator system. It is best to seek help from utility companies when filling out the form. Once the net metering application gets approved, the power company will place a special meter to measure the bilateral flow of electricity.

Louisiana Property Tax Exemption

Installing a solar system on a property increases its premium by an average of 4.1%. The rise in the value should consequently increase tax. However, Louisiana has a property tax exemption for solar residential owners to ease the cost of going green. The tax exemption runs yearly throughout the system’s lifespan (at least 20 years).

Louisiana Revised Statutes 47 § 633 codifies the Solar Energy System Tax Exemption. Under the exemption, the government annually removes the worth of the solar panels from the property value for tax purposes.

For example, a home in Louisiana worth $200,000 with solar panels costs $10,000. Usually, the property value would be $210,000 for property tax purposes. But, with the solar property tax exemption, the $10,000 value of the panels would be exempt from property taxes, leaving the property valuation at $200,000.

The tax exemption covers both new and existing solar energy systems, and there is no limit to the claim amount. Claiming the property tax on solar energy systems in homes and swimming pools needs no unique methods.

The tax assessor automatically overlooks their value because they are considered personal properties. This exception encourages homeowners to invest in renewable energy by reducing the burden of property taxes.

The following are the eligibility criteria:

• Property owners must apply to the assessor's office in the area where the property is to claim the exclusion.
• The application must have documents showing that the solar energy system meets the eligibility criteria.
• Also, the solar energy system must be on the same property as the residential property.
• It must provide energy for the residential property.
• The system must also follow all applicable safety and performance standards.

Louisiana Property-Assessed Clean Energy (PACE) Financing

Louisiana has a Property-Assessed Clean Energy (PACE) Financing program. PACE financing allows property owners to finance renewable energy in their properties. In turn, they repay the financing through their property tax bill. Property owners can request funding for energy improvements with a repayment time of up to 20 years.

The loan payment gets a fair assessment according to the property and pays in the same way as property taxes. In cases where the owner sells the property, the new owner takes over the payments.

The interest rates for PACE financing in Louisiana vary depending on the project and the borrower's creditworthiness. To qualify for the program, the property owner must be up-to-date on their property taxes and not have any delinquent tax liens. They must also own the solar panels by direct sale.

Louisiana Home Energy Loan Program (HELP)

The Louisiana Home Energy Loan Program (HELP) provides households with financial help for home energy expenses. The program offers low-interest loans of up to $12,000 for five years. HELP covers solar arrays and other energy-efficient upgrades, such as insulation, air conditioning, heating, and water heaters.

To participate in the HELP program, a homeowner must find a participating lender who sets their maximum loan amount and interest rate. As of 2023, the highest loan amount from the state is $6,000.

After selecting a participating lender, the borrower must choose from a pre-approved list of energy-efficient improvements or have a home energy rating conducted by a Home Energy Rebate Option (HERO) energy rater. The cost of the energy rating may be part of the loan.

Applicants must provide the following to apply:

• Utility bills for heating and cooling within the previous 30 days
• Payment receipts for any work done in the household within the last 30 days
• Recent check stubs for all household members
• Proof of unearned income
• Disconnection or pending notice from the energy company
• Proof of all members living in the house
• Social Security cards of all members in residence
• The applicant’s Social Security cards and government-issued photo identification (ID) card
• Proof of current address
• Applicants must also provide all household members proof of address.

Once the lender approves the loan, the Louisiana government gives half the amount. Maximum loans can go as high as $ 6,000 at a low-interest rate of 2%. The lender provides the other half at the market rate.

This blended rate offers homeowners a lower interest rate than on the open market, making it an affordable option for homeowners looking to make energy-efficient home improvements. Also, the program aims to help homeowners save money on energy bills by making energy-efficient upgrades more accessible and affordable.

Furthermore, it supports the state's goals of reducing energy consumption and promoting sustainability. As for the rate schedule, the state provides half of the loan amount at a fixed 2% interest rate, while the lender offers the other half at their market rate. The participating lender determines their rate.

Each lender participating in the program sets its interest rate and maximum loan amount. Thus, it is best to check with participating lenders to determine their specific interest rates and loan amounts. Checking participating lenders allows applicants to choose one with better offers.

Below is the Loiusiana HELP rate schedule per household:

State Sales Tax Exemptions in Louisiana

Louisiana does not offer sales tax exemption for solar systems purchased in the state. Solar sales tax exemptions allow resellers to buy or install solar panels without paying sales tax. Residents with resale intentions get exemptions, ensuring they pay back sales tax after their sale.

The exemption applies to buying and installing solar panels and related equipment (e.g., batteries and inverters) that generate electricity for the property. It does not cover installation labor costs or any other associated fees.

However, unlike some states, Louisiana charges a 4.45% sales tax that adds to the resident’s solar costs. Meanwhile, only retailers or residents intending to sell are exempt. Exempted individuals must complete a Tax Exemption License, the Louisiana Resale Certificate (R-1064).

The homeowner must present the certificate to the new owner after the transaction. Sellers must then keep a copy of the certificate on file for their records.

Renewable Energy in Louisiana

Renewable energy sources provided about 4% of Louisiana's net electricity generation in 2021. The primary renewable energy in the state includes the following:

• Solar Energy,
• Wind Energy,
• Biomass Energy,
• Geothermal Energy,
• Hydroelectric Energy.

The most significant percentage of energy generation in Louisiana comes from natural gas, which is about sixty-five percent. Nuclear power follows it with eighteen percent and coal eight percent.

Louisiana has one hydropower plant; the Sidney A. Murray Jr. Hydroelectric Station. This plant generates less than one-third of Louisiana's in-state renewable electricity. Louisiana needs more wind energy resource potential and utility-scale wind power generating facilities.

As of 2023, Louisiana does not offer a program for residents to buy 100% renewable energy. But it has policies aimed at encouraging renewable energy use. These include the Louisiana renewable energy rebate, net metering, and home energy loans.

Louisiana Household Profile

According to the Energy Information Administration (EIA) data for 2020, Louisiana's total energy consumption per capita is 903.1 million British thermal units (Btu). The state has an average residential consumption of 64.7 million Btu yearly. Meanwhile, the state ranks first in the industrial sector with an average energy rate of 657.6 million Btu. Louisiana also has a commercial energy consumption rate of 50.4 million Btu.

The state has many renewable energy tax credits to increase efficient energy use. Thus the renewable energy incentives in Louisiana include the following: \
The state previously ran the Louisiana solar panel tax credit, called the Income Tax Credits for Solar Energy Systems. Renewable energy systems bought and installed on or before December 31, 2015, were eligible. However, the state's legislature introduced a limit cap in 2016, which ended the scheme because of its strain on state coffers. The income tax credit paid residents up to 50% of the first $25,000 solar cost. Residents could enjoy this incentive alongside the 30% federal ITC.