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What solar incentives are available in Hawaii?
As a homeowner in Hawaii, you have access to several different tax incentives that make solar panels more affordable. Solar incentives are available at both the federal and state levels to help you save thousands on your investment in solar energy.
Solar Calculator is here to help you take the next step in your transition to renewable energy. Below, we’ll discuss some of the different ways you can make solar more affordable.
Federal solar incentives
As part of the Inflation Reduction Act of 2022, congress passed several clean energy provisions to reduce energy costs. Among those provisions was an extension and upgrade of the Federal Investment Tax Credit (ITC).
Federal Investment Tax Credit
The Federal ITC allows you to claim 30% of your total equipment and installation costs on your federal taxes. There is no minimum or maximum amount you can claim and it includes equipment, installation, permitting, and even battery storage.
The ITC will remain at 30% until December 31, 2032. After that it will be reduced to 26% until December 31, 2033, then to 22% the following year. The ITC is currently set to disappear in 2035 unless it is renewed.
Who is eligible for the Federal ITC?
Most homeowners will qualify for the Federal ITC, but not all. You must meet the following criteria to claim your 30% tax credit:
The Federal ITC will also cover the following expenses:
Homeowners save around $10,000 on average with the Federal ITC. But that number can be higher or lower depending on your total expenses.
How to claim the Federal ITC
Claiming your Federal ITC couldn’t be easier. All you have to do is fill out IRS form 5695 and submit it with your tax return. You can consult with a tax professional for more assistance.
Local solar incentives
Who’s eligible : Commercial, Residential
How to apply : S.B. 1087 of 2013 established the Hawaii Green Infrastructure Authority (HGIA) for the purpose of administering Green Infrastructure Bonds to secure low-cost financing for clean energy installations, including both renewable energy and energy efficiency measures. HGIA manages the Hawaii Green Energy Market Securitization (GEMS) Program, which is intended to create a sustainable financing structure through market driven public-private partnerships that will open access to financing for more Hawaii customers and democratize access to clean energy. HGIA has a goal of using 100% of funds to finance underserved households, defined as LMI households, renters, nonprofits, small businesses, and multi-family rental projects.
Who’s eligible : Commercial, Construction, Industrial, Residential, Installers/Contractors
How to apply : Hawaii Revised Statutes (HRS) §46-19.6 requires each county agency that issues building, construction, or development-related permits to establish a procedure for priority processing of permit applications for construction projects incorporating energy and environmental design building standards. The priority processing will be provided at no additional cost. Buildings eligible for priority processing are those that meet the "energy and environmental design building standards". These standards can be achieved by earning either a Leadership in Energy and Environmental Design (LEED) silver rating, a two Green Globes rating, or a comparable state-approved, nationally recognized, and consensus-based guideline, standard, or system. For further information, contact the appropriate county building department.
Who’s eligible : Commercial, Residential, Multifamily Residential
How to apply : Originally enacted in 1976, the Hawaii Energy Tax Credits allow individuals or corporations to claim an income tax credit of 20% of the cost of equipment and installation of a wind system and 35% of the cost of equipment and installation of a solar thermal or photovoltaic (PV) system.* For solar thermal water heating systems, the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 35% of the actual cost or $2,250, whichever is less; Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and Commercial property is eligible for a credit of 35% of the actual cost or $250,000, whichever is less. For photovoltaic and solar space heating systems, the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 35% of the actual cost or $5,000, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less; Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and Commercial property is eligible for a credit of 35% of the actual cost or $500,000, whichever is less. For wind powered energy systems the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 20% of the actual cost or $1,500, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less; Multi-family residential property is eligible for a credit of 20% of the actual cost or $200 per unit, whichever is less; and Commercial property is eligible for a credit of 20% of the actual cost or $500,000, whichever is less. For a system that is business property, it is important to note that the costs that exceed the amount allowable for the maximum energy tax credit may be used for the Capital Goods Excise tax credit. In addition, for taxable years beginning after December 31, 2005, the dollar amount of any utility rebate must be deducted from the cost of the qualifying system and its installation before applying the state tax credit. A new provision was added to the tax credits in June 2009, with the passage of SB 464. This legislation, effective July 1, 2009, allows the tax credit to be refundable under certain conditions. For solar energy systems, a taxpayer can reduce the eligible credit amount by 30%. If this reduced amount exceeds the amount of income taxes to be paid by the taxpayer, the excess credit will be refunded to the taxpayer. If the tax credit exceeds a tax payer’s income liability, the excess credit over liability may be used as a credit against the taxpayer’s income liability until exchausted. Taxpayers whose entire income is exempt or whose adjusted gross income is $20,000 or less (or $40,000 or less if filing jointly) may receive the tax credit as a refund.
Who’s eligible : Commercial, Residential, Multifamily Residential
How to apply : Originally enacted in 1976, the Hawaii Energy Tax Credits allow individuals or corporations to claim an income tax credit of 20% of the cost of equipment and installation of a wind system and 35% of the cost of equipment and installation of a solar thermal or photovoltaic (PV) system.* For solar thermal water heating systems, the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 35% of the actual cost or $2,250, whichever is less; Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and Commercial property is eligible for a credit of 35% of the actual cost or $250,000, whichever is less. For photovoltaic and solar space heating systems, the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 35% of the actual cost or $5,000, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less; Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and Commercial property is eligible for a credit of 35% of the actual cost or $500,000, whichever is less. For wind powered energy systems the maximum allowable credits are as follows: Single family residential property is eligible for a credit of 20% of the actual cost or $1,500, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less; Multi-family residential property is eligible for a credit of 20% of the actual cost or $200 per unit, whichever is less; and Commercial property is eligible for a credit of 20% of the actual cost or $500,000, whichever is less. For a system that is business property, it is important to note that the costs that exceed the amount allowable for the maximum energy tax credit may be used for the Capital Goods Excise tax credit. In addition, for taxable years beginning after December 31, 2005, the dollar amount of any utility rebate must be deducted from the cost of the qualifying system and its installation before applying the state tax credit. A new provision was added to the tax credits in June 2009, with the passage of SB 464. This legislation, effective July 1, 2009, allows the tax credit to be refundable under certain conditions. For solar energy systems, a taxpayer can reduce the eligible credit amount by 30%. If this reduced amount exceeds the amount of income taxes to be paid by the taxpayer, the excess credit will be refunded to the taxpayer. If the tax credit exceeds a tax payer’s income liability, the excess credit over liability may be used as a credit against the taxpayer’s income liability until exchausted. Taxpayers whose entire income is exempt or whose adjusted gross income is $20,000 or less (or $40,000 or less if filing jointly) may receive the tax credit as a refund.
Who’s eligible : Schools, State Government
How to apply : In May 2006, Hawaii’s governor signed HB 2175 addressing renewable energy, energy efficiency, and alternative fuels in state facilities and operations. This legislation also detailed requirements for renewable energy and energy efficiency in Hawaii’s public schools. State law requires energy efficiency and environmental standards for state facilities, motor vehicles, and transportation fuels. Each state agency must meet the following requirements to the extent possible: Buildings must be designed and constructed to meet the Leadership in Energy and Environmental Design (LEED) “Silver” standard, the two green globes rating system, or another similar guideline, standard, or system that is approved by the state. State buildings, including new residential facilities receiving state funds, must meet minimum insulation requirements, install high-performance windows, and, wherever possible, be oriented to maximize natural ventilation and day-lighting without heat gain and to optimize solar water heating. With the exception of single-family residential clients of the Department of Hawaiian Home Lands or any agency which can take advantage of utility rebates, solar water heating systems must be installed in all state facilities, if life-cycle cost-benefit analyses determine it to be cost-effective. State agencies must implement energy and water conservation practices in operations, and they are required to incorporate waste minimization and pollution prevention principles into standard operating practices. Agencies should use life-cycle cost-benefit analysis to purchase energy efficient equipment, using utility rebate programs whenever possible to reduce costs. Agencies are required to purchase environmentally preferable, resource-efficient products and materials. Agencies must also track vehicle data such as fuel consumption, EPA fuel economy ratings, and acquisition cost, and use alternative fuels when available. Actions taken by state executive agencies to comply with Act 96 (codified as HRS §196-9) and Act 160, which directs the reporting of electricity consumption by state agencies, are reported annually to the State Legislature. Enacted in June 2009, HB 1464 addressed energy efficiency requirements for existing public buildings. By the end of 2010, state agencies had to evaluate the energy efficiency of all existing public buildings larger than 5,000 square feet or that use more than 8,000 kilowatt-hours (kWh) annually. Opportunities for increased energy efficiency must be identified by setting benchmarks for these buildings using Energy Star Portfolio Management or another similar tool. Buildings must be retro-commissioned every five years. Enacted in July 2022, HB 1801 requires and establishes deadlines for state facilities to implement cost-effective energy efficiency measures. Additionally, HB 1801 establishes a goal of at least a twenty-five percent reduction in the electricity consumption of state facilities by 2025. Finally, where feasible and cost-effective, all new state building constructions must maximize energy and water efficiency and energy generation potential and use building materials that reduce the carbon footprint of the project. State facilities with an area under ten thousand square feet are exempt from these measure.
Can you claim multiple tax incentives in Hawaii?
Yes. You are allowed to claim multiple solar incentives for the same installation. However, you can only claim each incentive once. For more guidance on how to claim your solar tax incentives, talk to your installer or consult with a licensed tax professional before submitting your tax forms.
Does Hawaii offer tax exemptions?
Bond Program
Category : Financial Incentive
Website : https://gems.hawaii.gov/
Applicable Sectors : Commercial, Residential
Incentive Amount :
Implementing Sector : State
Green Building Incentive
Category : Financial Incentive
Website :
Applicable Sectors : Commercial, Construction, Industrial, Residential, Installers/Contractors
Incentive Amount :
Implementing Sector : State
Corporate Tax Credit
Category : Financial Incentive
Website : http://tax.hawaii.gov/geninfo/renewable/
Applicable Sectors : Commercial, Residential, Multifamily Residential
Incentive Amount : Solar Thermal and PV: 35% Wind: 20%
Implementing Sector : State
Personal Tax Credit
Category : Financial Incentive
Website : http://tax.hawaii.gov/geninfo/renewable/
Applicable Sectors : Commercial, Residential, Multifamily Residential
Incentive Amount : Solar Thermal and PV: 35% Wind: 20%
Implementing Sector : State
Energy Standards for Public Buildings
Category : Regulatory Policy
Website : http://energy.hawaii.gov/energy-efficiency-in-soh
Applicable Sectors : Schools, State Government
Incentive Amount :
Implementing Sector : State
Community Solar Rules
Category : Regulatory Policy
Website : https://energy.hawaii.gov/community-based-renewable-energy
Applicable Sectors : Commercial, Local Government, Nonprofit, Residential, Schools, Multifamily Residential, Low Income Residential, Institutional
Incentive Amount :
Implementing Sector : State
Net Metering
Category : Regulatory Policy
Website : https://www.hawaiianelectric.com/products-and-services/customer-renewable-programs/rooftop-solar
Applicable Sectors : Commercial, Industrial, Local Government, Nonprofit, Residential, Schools, State Government, Federal Government
Incentive Amount :
Implementing Sector : State
Grant Program
Category : Financial Incentive
Website : https://hidot.hawaii.gov/highways/hawaii-nevi-state-plan/
Applicable Sectors : Commercial
Incentive Amount : Varies, grants are awarded competitively
Implementing Sector : State
Interconnection
Category : Regulatory Policy
Website :
Applicable Sectors : Commercial, Industrial, Nonprofit, Residential, Schools, State Government, Federal Government
Incentive Amount :
Implementing Sector : State
Loan Program
Category : Financial Incentive
Website : https://www8.honolulu.gov/dcs/dcs-cad-loan-programs-for-homeowners/
Applicable Sectors : Residential, Low Income Residential
Incentive Amount :
Implementing Sector : Local
Category : Financial Incentive
Website : https://www.kiuc.coop/solar-water-heating-programs
Applicable Sectors : Residential, Multifamily Residential
Incentive Amount :
Implementing Sector : Utility
Category : Financial Incentive
Website : http://hdoa.hawaii.gov/agl/alternative-energy-loan-program/
Applicable Sectors : Agricultural
Incentive Amount :
Implementing Sector : State
Category : Financial Incentive
Website : http://energy.hawaii.gov/
Applicable Sectors : Commercial, Industrial, Nonprofit, Residential, Multifamily Residential
Incentive Amount :
Implementing Sector : State
Building Energy Code
Category : Regulatory Policy
Website :
Applicable Sectors : Residential
Incentive Amount :
Implementing Sector : State
Category : Regulatory Policy
Website : https://www.energycodes.gov/status/states/hawaii
Applicable Sectors : Commercial, Residential
Incentive Amount :
Implementing Sector : State
Rebate Program
Category : Financial Incentive
Website : https://kiuc.coop/commercial-programs
Applicable Sectors : Commercial, Local Government, Nonprofit, State Government, Federal Government
Incentive Amount : Commercial Retrofit Program: 50% - 100% of cost Commercial New Construction: 80% of the difference between the proposed and new design. Commercial Equipment Replacement: 80% of the incremental cost difference between the standard and high efficiency replacement equipment.
Implementing Sector : Utility
Category : Financial Incentive
Website : https://www.kiuc.coop/solar-water-heating-programs
Applicable Sectors : Commercial, Residential
Incentive Amount : Residential Solar Water Heating: $1,500 rebate
Implementing Sector : Utility
Category : Financial Incentive
Website : https://www.hawaiienergy.com/for-business/rebates/electric-vehicle-charging-stations
Applicable Sectors : Commercial
Incentive Amount : First Time Installation Level 2 Single-Port: $2,000/unit Level 2 Multi-Port: $4,500/unit DCFC: $35,000/unit Retrofit Level 2 Single-Port: $1,300/unit Level 2 Multi-Port: $3,000/unit DCFC: $28,000/unit Affordable Housing Bonus Incentive for single- and multi-port Level 2 chargers Existing Building: $5,000/unit New Construction: $1,500/unit
Implementing Sector : State
Category : Financial Incentive
Website : https://www.hawaiienergy.com/for-homes/rebates/water-heating
Applicable Sectors : Commercial, Residential, Federal Government
Incentive Amount : Residential Solar Water Heating: $1,250 upfront, or Residential Solar Water Heating Interest Loan Buy-Down: $1,250 Commercial: $250 per ton de-rated output
Implementing Sector : State
Category : Financial Incentive
Website : https://www.hawaiienergy.com/for-business/rebates
Applicable Sectors : Commercial, Industrial
Incentive Amount : Vending Occupancy Sensor: $50/unit Window Film: $0.43/sq. ft. or $0.85/sq. ft. Food Service Equipment: Varies Custom Measures: $0.08 - $0.12/kWh; plus demand reduction incentives HVAC Equipment: Varies Lighting: Varies ECM Motor (Fan Coil): $55/motor ECM Motor (Refrigeration): $85/motor VFD Domestic Water Pump System: $3,000 plus $80/HP reduction VFD Pool Pump System: $225/HP Refrigeration Equipment: Varies Heat Pump Water Heater: $0.12 per kWh saved + $125 per kW saved between 5 to 9pm
Implementing Sector : State
Category : Financial Incentive
Website : https://www.hawaiienergy.com/for-homes/rebates
Applicable Sectors : Residential
Incentive Amount : CFL Bulbs: Instant in-store rebates Heat Pump Water Heater: $500 Central A/C: $1,000 Window Air Conditioner Trade-Up: $45 Mini-Split A/C: $450 Air Conditioner Tune-Up: $75 Solar Attic Fans: $750 Whole House Fans: $100 Refrigerator/Freezer Recycling : $75 New Refrigerator Purchase (with Trade-in): $250 Variable Frequency Drive (VFD) Pool Pump: $150
Implementing Sector : State
PACE Financing
Category : Financial Incentive
Website :
Applicable Sectors : Commercial, Residential
Incentive Amount :
Implementing Sector : State
Renewables Portfolio Standard
Category : Regulatory Policy
Website : http://energy.hawaii.gov/renewable-energy
Applicable Sectors : Investor-Owned Utility
Incentive Amount :
Implementing Sector : State
Solar/Wind Access Policy
Category : Regulatory Policy
Website :
Applicable Sectors : Residential
Incentive Amount :
Implementing Sector : State
Appliance/Equipment Efficiency Standards
Category : Regulatory Policy
Website : https://energy.hawaii.gov/what-we-do/energy-efficiency/at-home-and-at-work/
Applicable Sectors : Commercial, Appliance Manufacturers
Incentive Amount :
Implementing Sector : State
Generation Disclosure
Category : Regulatory Policy
Website :
Applicable Sectors : Investor-Owned Utility, Municipal Utilities, Cooperative Utilities
Incentive Amount :
Implementing Sector : State
Public Benefits Fund
Category : Regulatory Policy
Website : http://www.hawaiienergy.com/
Applicable Sectors : Commercial, Industrial, Nonprofit, Residential, Federal Government
Incentive Amount :
Implementing Sector : State
Category : Regulatory Policy
Website :
Applicable Sectors : Investor-Owned Utility, Municipal Utilities, Cooperative Utilities
Incentive Amount :
Implementing Sector : State
Energy Efficiency Resource Standard
Category : Regulatory Policy
Website :
Applicable Sectors : Investor-Owned Utility
Incentive Amount :
Implementing Sector : State
Other Policy
Category : Regulatory Policy
Website :
Applicable Sectors : Residential
Incentive Amount :
Implementing Sector : State
Solar/Wind Contractor Licensing
Category : Regulatory Policy
Website : http://cca.hawaii.gov/pvl/boards/contractor/
Applicable Sectors : Installers/Contractors
Incentive Amount :
Implementing Sector : State
Property Tax Incentive
Category : Financial Incentive
Website : https://www.realpropertyhonolulu.com/help-resources/ordinances/
Applicable Sectors : Commercial, Industrial, Residential
Incentive Amount : 100% exemption for 25 years.
Implementing Sector : Local
What is the best way to pay for solar?
Cash payments
Paying cash upfront is easily the simplest and most cost-effective route — if you can afford it. It lets you maximize your total savings by avoiding interest rates and other fees. You also don’t have to worry about making monthly payments. But the downside is you have to spend a lot of cash at once which isn’t an option for everyone.
Pros
Cons
Financing
Financing solar panels is probably the most common payment method. You get to own the system — as opposed to leasing — but you don’t have to spend all your cash at once. And although you do have to pay interest, you can secure a fairly low interest rate as long you have good credit.
Pros
Cons
Solar leases and PPA agreements
If purchasing solar equipment isn’t an option for you, a lease or a PPA may be worth exploring. This is where you are essentially “renting” the equipment for a fixed rate each month. And although you don’t have ownership of your system, there are other benefits such as maintenance and servicing agreements.
Pros
Cons
Going solar doesn’t have to break the bank
Going solar is becoming more affordable than ever. And thanks to a variety of solar incentives in Hawaii, you can save thousands more on your investment.
Want to get an idea for what it will cost you to go solar? You can use our solar cost calculator to generate a customized estimate instantly. We take into consideration a wide range of criteria including location, electric bill, roof size, and other factors. Try it out today and start planning for your future.
