As a New Orleanian living with the weight of an impending climate collapse, I set out to answer this question for myself and I am here to share what I have learned with residents, businesses and nonprofits alike.
Good news! With increased efficiency and higher demand, the price of solar panels has declined exponentially, declining by 89% between 2009 and 2019.
According to Lazard’s Cost of Energy Analysis, the cost of residential solar energy falls within the range of fossil fuel generated electricity. For community, commercial or industrial scale solar, the cost range falls even below that of fossil fuels (Lazard).
Considering that energy prices rose 5% over 2021 to 2022 for customers in the U.S and are continuing to rise due to inflation, higher fuel costs, and increased demand of electricity due to extreme temperatures, investing in a solar project whose price tag will remain consistent over the years is looking more and more appealing to people (EIA). Also knowing that coal, oil and natural gas emit 176 times more greenhouse gasses than solar might make the decision more of a moral imperative.
What an interesting time to be alive, to be witnessing the world’s transition to renewable energy. We hope with this information you feel more informed and equipped to make an investment in solar with storage. Stay tuned, this is part one of a three part series on solar. Next time we’ll dive more into Inflation Reduction Act benefits and net-metering.
Below are a handful of items for you to consider while making the leap. From tax credits to where to recycle your solar panels, knowledge is power!
To help make solar and other renewable energies even more competitive with fossil fuel-generated power, Congress passed the Inflation Reduction Act (IRA) in August 2022. This act is the largest investment in U.S. history to address climate change.
One of the IRA’s aims is to decrease residential energy costs by offering increased home energy rebate programs and tax credits for high efficiency electric appliances, rooftop solar and battery storage. This act is bringing the cost of residential, commercial and industrial solar even lower than that of conventional fossil fuel generated electricity. It is fueling the renewable transition (Lazard).
In part two of this series we’ll discuss leveraging the Inflation Reduction Act for affordable solar panels and provide more information about how various tax credits (including a 30% standard) can drastically lower the cost of your solar project.
On Earth Day, 2024, The Louisiana Department of Energy and Natural Resources (DENR), in collaboration with the Louisiana Clean Energy Fund, were granted $156 million from the EPA’s $7 billion “Solar for All” grant initiative launched in June 2023. This grant aims to facilitate the promotion and establishment of equitable access to solar energy across the United States for states, territories, tribal governments, municipalities, and non-profit organizations.
Louisiana was granted this funding to facilitate the adoption of solar and storage solutions in low-income and disadvantaged communities and establish community solar facilities. The grant has been portioned out to include low-cost financing for solar, “equitable loan” programs for community resilience hubs, funding for residential upgrades to enable solar installation and funding for community solar development.
Keep an eye out for further updates on how the funds were distributed and details on how to access these benefits!
The price for your solar project will depend on a variety of factors, such as how much energy your household or project consumes, the availability of sunlight on your house/business, the direction and slope of the roof, and the type and efficiency rating of your panels.
The cost can vary between solar installers, so it is best to reach out to a few recommended companies for a consultation and quote. Solar installers will break down your quote into monthly payments, which you can compare to your average electricity bill. Your energy bill may also include natural gas and trash service, so make sure to factor that in.
Solar is installed by the kilowatt (kW). For a very energy efficient household, a 5 kW system may suffice. At the 2024 average of $2.64 per installed Watts in Louisiana, a 5 kW system runs about $13,200 ($2.64 x 5,000 Watts). After the 30% federal tax credit, this comes out to be $9,240 (Market Watch).
If you resemble the typical household in Louisiana, whose electricity usage surpasses the national average by 30% (the highest residential consumption rate in the country), then a 10 kW system is likely necessary. The cost of a 10 kW system is on average $26,400 or $18,480 after the standard 30% federal tax credit. (Market Watch).
Community and commercial scale solar projects are even cheaper per kW because they benefit from their scale. Since panels are only a quarter of the entire cost, which includes a mounting system, an inverter, system balancing, design, permitting and connecting to the grid, the larger your project, the larger your savings!
In part two of this series we’ll discuss leveraging the Inflation Reduction Act for affordable solar panels and provide more information about how various tax credits (including a 30% standard) can drastically lower the cost of your solar project.
The cost of acquiring solar panels is not only determined by the quality of panels you purchase and if you purchase a battery, but the extra cost of financing the solar system.
If you go through the route of financing your system, you need to consider the interest on the loan. The interest rates you receive will be determined by your credit score, how much money you can pay up front and the loan term. Rates vary drastically depending on these factors and with interest rates as high as they are currently, financing your solar project can add more cost than expected.
For example, let’s say you financed an 8 kW system for $14,784 (the amount after the 30% federal tax break) with zero money down and 7.99% interest for twenty years. You would pay a total of $32,798 over the life of the loan, which is $137/month. Keep in mind, energy prices from utilities will continue to increase, but your loan payment will stay the same.
If you have the capability to pay in full for your solar system, the long-term advantages are significant. For instance, without interest, the same 8 kW system would translate to a monthly equivalent of $49 over twenty years. Ideally, your panels will generate enough power to reduce your electricity expenses (via net-metering), resulting in only a connection fee remaining. For Entergy New Orleans customers, this is called a customer charge and is $8.06. For Entergy Louisiana customers, the minimum bill is $7.04, which would include a customer charge of $4.46. It’s important to note that you may still incur gas charges on your bill.
Leasing is another option for those who are unable to own their system. Leasing is best when the monthly payments are lower than your electricity bill since there is no long-term savings, as with a solar purchase. If you are a New Orleanian, check out the “Solar for All Nola” program, which offers no money down, no credit requirement leases and traditional financing for low-income homeowners and small businesses. Leases are for 25 years.
For those unable to purchase or lease solar panels, such as those who rent their home, live in an apartment complex or have an older roof, an alternative is subscribing to a community solar project. Community solar projects, sometimes called community solar farms or gardens, are solar arrays that are built to benefit multiple customers such as individuals, businesses, nonprofits and other groups. With community solar, you pay a monthly fee for a portion of the solar farm and get a credit on your electricity bill for how much energy your portion produced.
While there are currently no community solar projects up and running that residents and businesses can opt into in Louisiana, in 2023 the New Orleans City Council made positive changes to the community solar rules. The changes included an increase in tariff rate for customers and an increase in production rate for solar developers. Both these policy changes are positive for the development of community solar in New Orleans in the near future.
For the majority of the rest of the state, whose energy policies are controlled by the Louisiana Public Service Commission, distributed energy distribution is still severely limited. A rule change is needed to unlock the sun’s potential in this regard.
The policy of crediting solar panel owners for the excess energy their panels produce and feed into the grid is called net-metering. With full-retail net metering, the solar owner is credited at the same rate that the utility sells the energy.
Unfortunately in 2019, the Louisiana Public Service Commission approved changes to the state’s net-metering rules by slashing full-retail net-metering to an avoided-cost rate credit. Don’t worry New Orleans residents, your utility is under the jurisdiction of the City Council and you retained your full-retail net-metering benefits. Yet, for everyone else, the avoided-cost rate made having solar panels less financially beneficial, as you are credited at a lower rate for any surplus energy you generate and contribute to the grid. This avoided-cost rate varies by utility and is updated annually, but is a fraction of the full retail rate. If you are an Entergy Louisiana customer in 2024, this avoided- rate is only 3 cents per kWH and the full retail rate is around 12 cents per kWh.
For example, with full-retail net metering, if your panels sent 1000 kWh of energy to the grid in July, but your household only used 500 kWh from the grid that month, the excess credits will roll forward and your account will be credited for 500 kWh the next month. But with the avoided-cost rate metering, if your panels sent 1000 kWh to the grid and you only used 500 kWh that month from the grid, you would pay the full-retail rate for the 500 kWh you used and then be credited on your bill for 1000 kWh you contributed to the grid at the avoided rate, $0.03. You would receive a $30 credit (your contribution) and you would be billed for $60.
Your utility never sees the energy that you generate and use behind your meter, but every kWh you generate and use on site is effectively the same value as the utility’s kWh rate, since you are replacing energy you would otherwise be purchasing from your utility with your own generation. When you get a system installed, you can also get a tracker to allow you to see just how much electricity you are generating and using on site to get a better sense of the grid power you are displacing.
With full net-metering, you are actually receiving full compensation for the energy you are contributing to the grid. Utilities don’t want you to receive this full benefit because they aren’t making a profit from it. The Louisiana Public Service Commission has been asked to revisit their net-metering policy for Louisiana, as the existing credit program is a clear devaluing of the energy contributed to the grid. Stay tuned for a more in-depth analysis of this situation in part 3 of this series.
Since a majority of Louisianians are unable to benefit from full-retail net metering because of regulation that prioritizes utility profits, purchasing a battery to store your excess power is a great way to increase your savings. Having the ability to store the excess energy you create expands the times when your solar energy can be deployed and thus your savings.
A little known fact is that the cost of energy on the market fluctuates during the day and month, depending on the demand. In the evening hours between 4-9 pm, when the demand for energy is the highest, the cost is higher. For Louisiana utilities who offer “Time-of-Use” rates, (Cleco is one) you could choose to use your stored energy during high demand, high cost times, lowering your bill. Entergy New Orleans averages the cost of energy every month, so we do not see these fluctuations on our bill.
Not only do you lower your own bill by using your stored energy during peak times, but you lower it for your community. Collectively, expanding storage capacity will decrease the demand on the grid and also lessen the need to build new and expensive fossil fuel generated power plants.
Another important benefit of battery storage for a Louisiana resident is energy independence in power outages. With increased storms and power outages, having a battery can help keep your critical loads such as refrigerator and freezer running during a black out. If your panels are connected to the grid, in most cases you cannot use the power directly from your solar panels in a power outage, but your panels can continue to charge your battery! With a battery, you can also avoid the hassle of using a noisy, fuel intensive, and dangerous gas-powered generator.
Out of lithium-ion batteries, lithium iron phosphate (LFP) and nickel manganese cobalt (NMC) are the most popular. LFP is currently more popular because it can withstand higher temperatures than NMC. While Lithium mining does have its environmental impacts, LFP doesn’t contain toxic and contentious metals such as nickel or cobalt, making it easier to recycle. While it is slightly more expensive than NMC, it has a higher lifespan at over 10 years and is the go-to choice for batteries these days.
Lithium-ion batteries can add over $10,000 to the total cost of your solar panel system but the price is continuing to drop. Solar with storage is pivotal in achieving our climate goals over the next decade.
Another consideration when purchasing panels is the manufacturer’s warranty. There are different components to solar warranties that you should inquire upon. First would be a product warranty, which covers product defects. Industry standard is at least 10 years, while some premium companies offer 25 to 30 years and some cover the inverter and racking equipment. Another component is a performance warranty, or what percentage of power output is guaranteed at a certain term (typically 25 years). Most manufacturers will guarantee 80% of the original output by the end of the warranty term, with more premium manufacturers guaranteeing up to 92%. Also, ask if labor for diagnostic, repairs or replacements and the cost of shipping is covered in the warranty.
Some other questions to ask are: Can you extend your product and/or performance warranty by paying more? If you sell your house, does the warranty transfer automatically or must you fill out paperwork? If the company goes out of business, will the warranty still be covered? And how easy is it to make a warranty claim?
Figuring out what’s covered under your warranty will give you peace of mind through the lifespan of your panels, which is at minimum 25 to 30 years. Compare some product warranties here.
While warranties cover defects and installation failures, they do not always cover storm damage. It is wise to talk with your homeowners insurance company to see what changes need to be made to your policy to secure your coverage. If the panels are attached to your roof, they should be covered under “dwelling coverage.” If they are ground mounted, they should be covered under “structures coverage.” You may want to increase your insurance coverage to cover any damage to the panels If your roof is damaged in a storm and needs replacing, your insurance company should cover the cost of solar panel removal and reinstallment. It is industry standard to install panels on roofs that are 5 years old or less, because you don’t want to have to replace your roof after you’ve installed your panels (Guide to Homeowners Insurance and Solar Panels).
You may also be wondering what kind of maintenance is needed on solar panels. Luckily for you, little is needed to maintain them except cleaning them a few times a year. How dirty they might become depends on their slope and the type of tree-fall nearby.
Installers must meet building code requirements to withstand weight loads and wind speeds, so your panels should withstand hurricanes. Inquire with your installer on what their wind rating is to be sure. Read more about What Happens to Solar Panels in a Hurricane?
Last but not least, it is very important to consider what will happen to your panels and battery after their 25 and 10 year lifespans, respectively. By 2030, the United States could have as much as one million tons of solar panel waste in landfills. By 2050, that number is expected to be ten million tons.
Before taking your panels or battery to the dump, consider these alternative options. The first is to continue using them. While your warranty may be up after 25 years and they may not be producing at peak capacity, the panels will continue to produce energy and have only, on average, a 0.5% yearly degradation rate. When the time has come to replace them, consider the solar panel and battery resale market.
Lauren Nagel is excited to be interning with the Alliance for Affordable Energy, diving deeper into the world of environmental policy, research, and advocacy. Lauren, a former educator and carpenter, is currently pursuing work that furthers a just climate transition.
She is passionate about the future of wind power in the Gulf, municipal composting, a circular economy, and the end of single-use plastics. Lauren has a B.A. in Fine Arts from the University of California-Santa Barbara, and in her spare time makes colorful sculptures out of plastic she finds washed up on the shores of Lake Pontchartrain.
