Impact Study of Louisiana
Solar Tax Credit
Louisiana receives one of the highest average sun exposures in the
US (5 hours per day annual average) exceeded only by the desert
southwest. This makes Louisiana the perfect location to utilize
solar tax credits. As of March 11, 2011, the Louisiana Department
of Revenue has approved $11,807,066 in tax returns for residential
solar energy projects in the state.1 What follows is an investigation
into the economic and environmental ways that Louisiana has
benefited from these tax credits.
Impact Overview
Jobs
Earnings
Economic Profit
Electricity Generated
Emissions Reductions
243 Full-time Equivalent
$10,937,800
$28,672,700
8,574,930 kWh
5936 metric tons CO2-equivalent
Solar energy offers many benefits for homeowners as well as for the economy and
environment. Many of these benefits are discussed in the US Environmental Protection
Agency’s “Assessing the Multiple Benefits of Clean Energy” published in February
2009. Solar energy benefits environmental quality through the reduction of greenhouse
gas emissions which then enhance human health by improving air and water quality.
Additionally, solar helps Louisiana ratepayers by reducing the amount of electricity that
is purchased from out of state while also creating jobs, income, and economic profit
during installation. The following information will expand on these benefits.
Energy Production
Every solar owner has their own reason for “going solar.”
Some individuals like the idea of “green power,” some want to
take advantage of the tax incentives, and some are primarily
concerned with having lower electricity bills. A major reason
why individuals choose to install solar energy systems is to have a clean, renewable
energy production method for residential use. Between 2008 and 2010, 8,574,930
kilowatt-hours of electricity, with a retail value of $771,744, were produced in Louisiana
using solar energy installed under the tax credit program. To better understand this
Impact Study of Louisiana Solar Tax Credit
number in household terms, 1 kWh is enough energy to
power a 100 watt light bulb for 10 hours. Over the
projected 25-year lifetime of these Louisiana systems
installed between 2008 and 2010, approximately
110,514,156 kWh will be produced, with a retail value of
$9,946,274.2 The electricity produced replaces peakdemand electricity normally purchased from out-of-state,
keeping more money in-state (peak-shaving).
Over the 25 year lifetime of
Louisiana solar systems, more
than 110 thousand kWh will
be produced, a retail value of
nearly $10 million
Environmental Quality and Human Health
The benefits of solar energy to environmental quality and human health are primarily tied
to the reduction of greenhouse gases. The Environmental Protection Agency regulates
emissions of toxic chemicals like those released when burning fossil fuels to generate
electricity. Emissions are reduced when solar energy replaces the burning of fossil fuels
such as natural gas and coal. Reduced emissions improve
the quality of air, water, and aquatic habitats. As of March
2011, Louisiana’s solar energy production has avoided
Celebrity Solar
5,936 metric tons of CO2-equivalent emissions.3 Improved
The use of solar power in
air quality can also help avoid fines and reduce costs
Louisiana was given a
associated with regulation. All of these benefits have an
boost in the rebuilding
economic impact which will be discussed later in this
efforts
following
Hurricane
Katrina.
report.
According to a National
Geographic article, “A
Solar Restart,” solar
panels were incorporated
into homes in the Make it
Right
development,
spearheaded by actor
Brad Pitt. Solar power
was also incorporated
into Global Green’s
project in the Lower
Ninth Ward’s Holy Cross
neighborhood, organized
by actor Wendell Pierce.
Electrical Grid
The Louisiana solar tax credits benefit not only solar
owners but all Louisiana ratepayers. Solar power systems
actually help lower all ratepayers’ electricity! Net metered
systems provide clean electricity to the grid during peak
sunlight hours. This reduces the amount of electricity that
is purchased from outside the state at higher rates to
supplement the peak power that is needed.
Other benefits of the connection of solar energy to the
overall state electricity system are
avoided or deferred construction of
new
plants
and
transmission
infrastructure, avoided suboptimal electricity generation and
imports, avoided transmission losses, and improved emergency
preparedness. Currently, solar investments are not large enough to
have a significant impact on avoided construction, however the
electricity produced by solar between January 2008 and March 2011
has avoided $569,000 of electricity imports.
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Impact Study of Louisiana Solar Tax Credit
Back-up Generators
Solar to the Rescue
In times of emergency, solar power
systems that have battery backup offer
several benefits over typical fossil fuel
generators. They are more reliable and
easier to use, do not put a strain on scarce
fossil resources, do not require traveling in
potentially dangerous circumstances to
acquire fuel, and do not carry the risks of
poisoning and asphyxiation from exhaust
inhalation. The risk of fire is also
significantly less. Overall, this improves
the safety of users and decreases the strain
on emergency responders and resources.
Solar power with grid-tie battery backup aids
Louisiana in times of power outages. One installer
estimates that over 50% of the systems installed have
hybrid battery-backup systems. Chuck Morris, a
Louisiana solar customer, used solar power to provide
water from his well to his family following Hurricane
Gustav. In the past, the electric well-pump shut off if
the power went out. However, for the ten days of
power outage after Gustav, Mr. Morris was able to
have running water due to his solar system with
battery backup.
Another suburban Baton Rouge solar power
owner, Craig Hart, took advantage of the tax credit.
The infrastructure in his neighborhood is old and
overloaded even though it is underground and
protected from storms. The Harts were excited to
report that they did not notice that their block had lost
power 3 times in the first 60 days of installation
because their solar power system maintained their
electricity. The computers, lights, and other electrical
appliances did not even blink since they were backed
up by solar power.
Economy
Louisiana’s $11,807,066 in tax refunds
created 243 full-time equivalent jobs
representing $10,937,800 in earnings and
$28,672,700 in total economic output.4
This does not include the significant
economic benefits of environmental and health improvements, energy system resilience,
emergency preparedness, peak-shaving, and positive publicity. Positive
publicity about solar improves the image of Louisiana as a forward-thinking,
technologically-advanced, and environmentally-conscious state. It spotlights
renewable energy and lets young professionals know that they do not have to
leave the state to find exciting new opportunities.5 The economic value of
talent retention and positive image is important to consider.
Summary
A Bright Idea
Solar has many benefits
including increased economic
activity, reduced greenhouse gas
emissions, improved human and
environmental health, support
for electrical system, and backup emergency power
When assessing the costs versus benefits of solar energy
tax credits in Louisiana it is important to consider the
impact of solar energy investments on the state’s economy,
electric system, human health, and environmental quality.
Solar energy tax credits have created benefits in all of these
areas as well as created jobs and increased economic
development. A more sophisticated impact assessment
would quantify these benefits in greater detail and with
greater accuracy. Overall, the solar tax credits have been
successful in leading Louisiana toward economic stability
and energy efficiency.
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Impact Study of Louisiana Solar Tax Credit
Endnotes:
1) Source: Department of Revenue, Policy Services.
2) Calculated based on even distribution of yearly installations over 12 months, 130kWh/month average
production per kW installed capacity, and $0.09/kWh retail rate.
3) Based on decreased generation of natural gas-fired power plant with an average carbon-equivalent
intensity of 650g/kWh.
4) Based on National Renewable Energy Laboratory’s Jobs and Economic Development Impacts (JEDI)
model. JEDI is based on IMPLAN, the same model used for the Louisiana Film Incentives impact analysis.
5) Based on Richard Florida’s assessment in “Cool Corridor.”
http://www.1012corridor.com/news/2010/nov/02/cool-corridor/
References:
Center for Resource Solutions. “Best Practices in Public Claims for Solar Photovoltaic
Systems.” October 2010.
http://www.greene.org/docs/energy/Solar%20FAQ%20and%20Claims.pdf
Mulholland, Denise. “Assessing the Multiple Benefits of Clean Energy: A Resource for
States.” US Environmental Protection Agency, February 2010.
http://www.epa.gov/statelocalclimate/resources/benefits.html
U.S. Energy Information Agency. State Energy Data System.
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