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Are Solar Panels Worth It in Louisiana? A Digital Technology Expert‘s Guide to Saving on Solar

As a digital technology expert and solar energy enthusiast, I‘m often asked by Louisiana homeowners: are solar panels really worth the investment in the Pelican State?

It‘s a fair question, especially given Louisiana‘s lackluster solar incentives and the recent changes to net metering rules that have reduced the benefits for solar owners. However, after extensive research and analysis, I believe that solar is still a smart financial move for most Louisiana residents.

In this article, I‘ll dive into the key factors that impact solar savings in Louisiana, including equipment costs, electricity rates, sunlight exposure, and available incentives. I‘ll also share some tips for maximizing your solar investment and finding the best installer for your needs.

By the end, you‘ll have a clear understanding of whether solar makes sense for your specific situation and how much you could save in the short-term and long-term. Let‘s get started!

Louisiana Solar Incentives: A Mixed Bag

When evaluating the economics of solar, the first place to look is state and local incentives. Unfortunately, Louisiana ranks near the bottom of the nation in this category.

The state does not offer any direct tax credits, rebates, or performance payments for residential solar installations. There is a state tax credit for solar energy systems, but it only applies to commercial installations.[^1]

Louisiana also doesn‘t have a mandatory Renewable Portfolio Standard (RPS) that would require utilities to source a percentage of their electricity from solar and other renewables. The state set a voluntary goal of 4% renewables by 2020, but utilities were already meeting that target through existing hydroelectric facilities.[^2]

The one bright spot for Louisiana solar incentives is the property tax exemption for residential solar installations. Thanks to this policy, adding solar panels to your home will not result in higher property tax assessments, even though a solar array may add tens of thousands of dollars to your home‘s value.[^1]

But the biggest blow to Louisiana‘s solar incentive landscape came in 2019, with the gutting of the state‘s net metering program…

Louisiana Net Metering Changes Reduce Solar Savings

For years, one of the key benefits of going solar in Louisiana was net metering – a billing mechanism that compensated solar owners for the excess electricity their panels sent back to the grid.

Prior to 2019, Louisiana utilities were required to pay solar customers the full retail rate for their surplus solar generation, which in Louisiana averages around 11 cents per kilowatt-hour (kWh).[^3]

However, under pressure from utility companies, the Louisiana legislature passed a bill that significantly reduced the value of net metering credits. Now, utilities in Louisiana only have to pay solar owners the "avoided cost" rate for excess generation, which is essentially the wholesale cost that utilities pay for electricity from other sources.

The current avoided cost rate is only 3-4 cents per kWh – less than a third of the retail rate solar owners previously received.[^4] This change dramatically increased the payback period for solar installations in Louisiana.

Here‘s a table showing the impact of the net metering change on a typical 6 kW solar system in Louisiana:

Metric Before 2019 After 2019
Excess solar rate ($/kWh) $0.11 $0.035
Annual solar savings $1,056 $816
Payback period (years) 8.2 10.6

*Assumes 6 kW system, 18% capacity factor, 50% of generation exported to grid, $3.00/W installed cost, 30% federal tax credit.

As you can see, the payback period for a typical solar installation increased by almost 2.5 years due to the reduced net metering credits. This change has made the decision to go solar more challenging for Louisiana homeowners.

Louisiana Solar Costs and Payback Periods

Despite the reduced net metering incentives, the fundamentals for solar power in Louisiana remain quite favorable thanks to low installation costs, high electricity prices, and ample sunshine.

According to data from the Solar Energy Industries Association, the average installed cost for residential solar in Louisiana is $3.05 per watt (W) – 19% lower than the national average of $3.76/W.[^5] For a typical 6 kilowatt (kW) system, this translates to a total cost of $18,300 before incentives.

Louisiana also has some of the highest electricity prices in the country, with residential customers paying an average of 11.76 cents per kWh.[^6] This is nearly 20% higher than the U.S. average.

High electricity rates are actually a good thing for solar economics because they increase the value of the electricity offset by a solar installation. In other words, the more expensive your electricity is, the more valuable your solar generation becomes.

Louisiana also ranks among the top 20 states for solar energy generation potential, with an average of 4.68 peak sun hours per day.[^7] This means a 1 kW solar array in Louisiana will generate about 4.68 kWh of electricity per day on average.

To put this all together, let‘s look at the estimated costs and savings for a 6 kW solar installation in Louisiana:

Item Amount
System Size 6 kW
Gross Installed Cost $18,300
Federal Tax Credit (30%) -$5,490
Net Installed Cost $12,810
First Year Solar Generation 10,134 kWh
First Year Electricity Savings $1,192
Payback Period 10.7 years
25-Year Electricity Savings $47,124

As you can see, the payback period for solar in Louisiana is just under 11 years, which is on par with the national average. Over the 25+ year lifespan of the solar array, a Louisiana homeowner can expect to save over $47,000 on their electricity costs.

Of course, these are just estimates based on state averages. The actual payback period and savings will depend on factors specific to each homeowner, such as the size and orientation of their roof, their electricity usage patterns, and the specific net metering policies of their utility company.

Louisiana Solar Adoption: Room for Growth

Despite the solid economics, Louisiana has been relatively slow to adopt solar energy compared to other states. As of Q2 2021, Louisiana had 191 MW of installed solar capacity – ranking it 35th in the nation.[^5]

To put that in perspective, Louisiana‘s current solar installations only provide enough electricity to power about 20,000 homes. That‘s less than 1% of the state‘s total housing units.[^8]

However, there are signs that solar is starting to catch on in the Pelican State. Louisiana added 25 MW of solar in 2020, a 22% increase over the previous year.[^5] And the state‘s largest utility, Entergy, recently announced plans to add 475 MW of solar generation by 2025.[^9]

But for Louisiana to really become a solar powerhouse, it will need more supportive policies from state lawmakers and regulators. Restoring full retail net metering, implementing a mandatory RPS, and offering direct cash incentives for solar installations would go a long way towards boosting solar adoption.

The good news is that the costs of solar continue to fall year over year, thanks to improvements in panel efficiency, manufacturing, and installation techniques. In the last decade alone, the cost of solar has fallen by more than 70% according to the National Renewable Energy Laboratory.[^10]

As solar costs continue to decline and electricity prices rise, the economics of going solar in Louisiana will only get better over time. For homeowners that can take advantage of the current 30% federal tax credit before it expires, now is an especially good time to consider a solar investment.

Tips for Going Solar in Louisiana

If you‘re a Louisiana homeowner considering a solar installation, here are a few tips to keep in mind:

  1. Get multiple quotes from reputable installers. The solar industry is competitive, and prices can vary widely between companies. Getting several quotes will help ensure you‘re getting the best deal. Look for installers with plenty of experience, positive customer reviews, and certifications from industry groups like the North American Board of Certified Energy Practitioners (NABCEP).

  2. Evaluate your electric bill and energy usage patterns. To accurately size your solar system and estimate your savings, you‘ll need to have a good understanding of your electricity consumption. Your installer can help with this, but it‘s good to review your past electric bills to get a sense of your usage patterns throughout the year.

  3. Consider your financing options. While paying for a solar installation in cash will provide the best return on investment, it‘s not feasible for everyone. Louisiana has several solar loan options available, including the HERO financing program which allows you to repay your loan through your property tax bill.[^11] Be sure to compare the interest rates and terms of different financing options to find the best fit for you.

  4. Research your utility‘s net metering policy. As mentioned above, Louisiana utilities now compensate solar owners at the avoided cost rate for excess generation. However, the exact details of net metering can vary between utilities. Some may offer additional incentives or have different billing structures. Be sure to contact your utility directly to understand their specific solar policies.

  5. Don‘t forget about the federal tax credit. The 30% federal solar investment tax credit is a huge benefit that can significantly reduce the cost of your installation. However, you must have enough tax liability to claim the full credit in the year of installation. If you‘re unsure how the credit will affect your taxes, consult with a tax professional.

The Future of Solar Power in Louisiana

Looking ahead, I believe the future is bright for solar energy in Louisiana. Despite the challenges posed by unsupportive state policies, the economics of solar continue to improve and adoption is slowly but steadily increasing.

In the coming years, I expect to see more Louisiana utilities embrace solar as a low-cost, reliable source of clean energy. I also anticipate that the state legislature will face increasing pressure from residents and solar advocates to implement policies that support distributed solar generation.

Of course, the biggest variable in the solar equation is the price of electricity. If Louisiana electricity prices continue to rise faster than the national average (as they have for the past decade), the incentive for homeowners to go solar will only increase.

Ultimately, I believe solar power will play a critical role in Louisiana‘s energy mix in the decades to come. By investing in solar today, Louisiana homeowners can save money, reduce their carbon footprint, and contribute to a cleaner, more resilient energy future for the state.

The key is to do your research, crunch the numbers, and find a reputable installer that can help you maximize your solar savings. With the right approach, solar panels can be a smart, rewarding investment for Louisiana homeowners.

[^1]: Database of State Incentives for Renewables & Efficiency
[^2]: National Conference of State Legislatures – State Renewable Portfolio Standards and Goals
[^3]: U.S. Energy Information Administration – Louisiana Electricity Profile
[^4]: Institute for Energy Economics and Financial Analysis – Louisiana PSC Approves Entergy‘s Request to Slash Solar Net Metering
[^5]: Solar Energy Industries Association – Louisiana Solar
[^6]: U.S. Energy Information Administration – State Electricity Profiles
[^7]: Solar Energy Industries Association – Top 10 Solar States
[^8]: U.S. Census Bureau – QuickFacts Louisiana
[^9]: Entergy – Entergy Louisiana Adds 475 MW of Solar Power With Planned Portfolio Expansion
[^10]: National Renewable Energy Laboratory – Solar Installed System Cost Analysis
[^11]: Louisiana Department of Natural Resources – Financing Options