Louisiana to shut down solar tax rebate after exceeding cap

On Tuesday, the Louisiana Department of Revenue issued a notice warning that the volume of claims submitted for the state’s solar energy tax rebate has exceeded a $25 million cap for the entire program.

Louisiana had one of the most generous incentives for distributed solar in the nation, with a 50% state tax rebate for both residential PV and solar thermal systems. However, last July the legislature capped the total budget for the program at $10 million for fiscal year (FY) 2015-2016, another $10 million for 2016-2017, and $5 million for 2017.

The Department of Revenue says that it is currently reviewing 2015 claims, but has already found that the amount of approved credits under review has exceeded the FY 2015-2016 budget by $14 million. Once FY 2015-2016 exceeds its cap customers are rolled over to the following year, but at this point it is clear that the entire budget for all three fiscal years has been used up.

“Consumers purchasing residential solar energy systems from this point forward should not expect to receive tax credits from the state,” notes the Department.

This may be an understatement. Gulf States Renewable Energy Industries Association (GSREIA) notes that when the 2015 when the credit was changed, eligibility moved from providing rebates starting with the first system installed in a tax year to the first taxpayer who applied for the credit. As a result, GSREIA notes that up to 2,000 homeowners who purchased PV systems may find themselves “stranded, with delayed or rejected solar tax credits”.

“It’s probably the meanest thing the state could have done to people who already installed solar in the first half of the year,” GSREIA President Jeff Cantin told pv magazine.

Largely due to the generous state tax rebate, Louisiana had the 10th-largest residential solar market in the United States, however the state has suffered under a series of policy setbacks. The state’s largest utilities have all shut down their net metering programs after hitting extremely conservative program caps, leaving New Orleans – which is regulated separately – as one of the few areas remaining with viable net metering.

Now, the end of the state tax rebate is expected to further limit the state’s solar market. GSREIA has put a call out to its members to contact the governor and the legislature to ensure that at least those homeowners who installed PV systems before the law was changed will receive the credit.

“The credit program could have been managed a lot better to protect the consumer and protect the businesses that invested in it,” states Cantin. “They rapidly built a market and then they tore it down.”