The complete list of Hawaii solar incentives and tax credits for 2023, plus how to take advantage.
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Hawaii is one of the best places to go solar in the U.S. The Aloha State offers an incredible 35% solar tax credit and a property tax exclusion for solar. Several utilities and local governments offer solar rebates and some have begun incentivizing homeowners to install battery storage systems connected to the grid.
The really big draw for going solar in Hawaii, though, is the state’s incredibly high electricity prices. Pop some solar panels on your roof and you can start producing your own electricity, which we calculate could save the average homeowner in Hawaii a staggering $116,500 in electricity costs over the 25-year lifespan of most solar panels.
Hawaii Solar Incentives
| Incentive | Description |
|---|---|
| State solar tax credit | 35% personal income tax credit, up to $5,000 |
| Solar rebates | Local and utility rebates available up to $1,500 |
| Low-cost state and local solar loans | Hawaii offers low-cost solar loans to low-income homeowners; other subsidized loan options are available in Honolulu and through private utilities |
| Honolulu property tax exemption | Solar installations are excluded from property taxes in Honolulu |
| Net metering | Utilities no longer have to offer net metering in Hawaii but two now offer incentives for battery storage connected to the grid |
Hawaii state solar tax credit
The big draw for going solar in Hawaii (aside from high electricity costs) is the state’s Renewable Energy Technologies Income Tax Credit. This generous credit equals 35% of your total system cost, up to a maximum of $5,000 for solar and wind installations.
Pair the state solar tax credit with the federal solar tax credit and you’ve got a hefty discount on going solar in Hawaii. As an example, for a $20,000 solar energy system in Honolulu, a homeowner could claim the full $5,000 tax credit, then an additional $5,200 for the federal tax credit. This would reduce the cost of going solar to just $9,800, or around the same cost as paying for electricity for two and a half years in Hawaii!
(Hawaii also offers a corporate tax credit of 35% up to a maximum of $2,250 for solar water heating and $250,000 for photovoltaic systems up to 5 kW.)
Solar loans in Hawaii
Hawaii State offers a Green Energy Money Saver (GEMS) Program that makes solar loans available to low-income homeowners. For convenience and to preserve credit ratings, customers’ monthly payments are built into utility bills after system installation.
The City and County of Honolulu also offer solar loans with 0% interest up to a 20-year payment term for eligible low-income homeowners.
Solar loans are also available from private lenders. One great option is the Hawaii State Federal Credit Union, which offers low-cost solar and photovoltaic loans with 0% interest and no payments for 24 months, after which interest rates may be as low as 7.70%.
Hawaii solar rebates
There are no state solar rebates in Hawaii, but homeowners can access several rebates from utilities and local governments, depending on where they live. These are mostly for solar water heating as Hawaii has already installed a lot of solar photovoltaic systems. Homeowners in Oahu and Maui may be eligible for rebates on solar batteries, though.
Members of the Kauai Island Utility Cooperative can apply for a $1,500 rebate or a zero-interest loan to replace their existing electric water heater or non-functioning solar water heater with a new solar water heater.
Hawaii Energy members can apply for a $750 rebate to install solar water heating systems. The utility also offers a $100 rebate for a solar water heater tune-up by a participating contractor, which it recommends every five years.
Solar customers in Oahu and Maui can access the Hawaiian Electric Battery Bonus. This is a cash incentive for adding a solar battery to new or existing rooftop solar systems. The incentive amount depends on battery output but can be up to $850 per kW produced.
Hawaii Energy Co (HECO) also offers rebates of $750 for solar hot water installation. These are paid to the contractor after installation.
Property tax exemptions in Hawaii
Hawaii doesn’t offer a state property tax exemption for solar, but Honolulu residents can claim a property tax exemption. Technically, this is only for alternate energy improvements to buildings, as solar installations are automatically not included in assessments for property tax purposes.
Other local governments may also offer exemptions from property taxes associated with value added by solar. Check with your local assessment office for more information.
Net metering in Hawaii
Net metering is no longer available for new solar installations in Hawaii. The Hawaii Public Utilities Commission has, however, introduced several rooftop PV system programs.
The Smart Export program from Hawaiian Electric is for customers with installed battery capacity. This program gives credits to customers who charge their batteries during the day using solar energy and then export surplus energy to the grid from 4 p.m. to 9 a.m. Specialized equipment is necessary to manage energy flowing in and out of the battery, and the utility helps with this side of things.
The Customer Grid-Supply Plus (CGS Plus) program doesn’t require battery storage but pays a lower rate for energy a customer exports during daylight hours.
Final thoughts on state solar incentives in Hawaii
Hawaii gets more than the average amount of sun in the U.S., meaning the average household can meet its energy needs with an 8 kW array. Given the high cost of electricity in the state, and the availability of tax credits and other incentives, we calculated the potential solar payback period for Hawaii to be under two years!