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Hawaii - Energy tax credit, solar rebates and incentives

Hawaii Renewable and Solar Energy Incentives

Solar and Wind Energy Credit (Commercial/Residential)

This tax credit enables residences and commercial entities to utilize a 20% credit on installation and equipment costs for wind energy systems and 35% for PV and solar thermal systems.

Solar Panel Installations (PV - electric)

  • Single Family Residency – 35% of overall costs or $5,000 (lesser value prevails).
  • Multi-Family Residency – 35% of overall costs or $350/unit (lesser value prevails).
  • Commercial – 35% of overall costs or $500,000 (lesser value prevails)

Solar and Wind Energy Credit - Continued

Wind Energy System Credit:

  • Single Family Residency – 20% of overall costs or $1,500 (lesser value prevails).
  • Multi-Family Residency – 20% of overall costs or $200/unit (lesser value prevails).
  • Commercial Wind Power – 20% of overall costs or $500,000 (lesser value prevails).

Solar Thermal System Credit:

  • Single Family Residency – 35% of overall costs or $2,250 (lesser value prevails).
  • Multi-Family Residency – 35% of overall costs or $350/unit (lesser value prevails).
  • Commercial Solar Thermal – 35% of overall costs or $250,000 (lesser value prevails).

Unused credit may be transferred over to the next taxable year until completely used up.

Solar Roofs Initiative Loan Program – Honolulu (Residential)

Residents of Oahu are offered zero to low-interest loans that may be put toward the purchase and installation of a solar water heating system.

  • Qualified homeowners are granted an option of either 0% or 2% interest on loans (depends upon level of qualification).
  • Homeowners must pay back loans within a 7-year period.
  • Loan amounts are capped at $80,000/family unit and $125,000/property.

Solar Roofs Initiative Loan Program – Maui County (Residential)

  • Qualified residents in the county of Maui are offered zero-interest loans on solar water heating systems.
  • Participants in this program also receive a $1,000 rebate through the Hawaii Energy Efficiency Program (HEEP) if a program-approved contractor installs the system.
  • Loan awards are based on the income of the applicant. 
  • Repayment of loans is dependent upon expected savings.

Hawaii Feed-in Tariff (Residential/Commercial)

The Hawaii Public Utilities Commission established a feed-in tariff that’s administered through the HECO, MECO and HELCO utility companies.

  • Qualifying systems: solar thermal electric, hydroelectric, wind, solar panel electric (PV).
  • Participants in this program will sign an agreement which stipulates a fixed rate over 20-years.  This rate is currently undisclosed.
  • Systems must not exceed 5 MW in size to be eligible.

Property Tax Exemption for Alternative Energies – Honolulu (Residential/Commercial)

  • Buildings that utilize alternative energy technologies are completely exempt of property taxes for up to 25 years.
  • Qualifying systems: solar water heat, solar thermal electric, landfill gas, wind, solar panel (PV), biomass, CHP/cogeneration, solar pool heating, anaerobic digestion, tidal energy, wave energy.

State and Utility-sponsored Rebate Programs (Residential/Commercial)

Hawaii has several rebate programs administrated by the state and participating utility companies.  The majority of these programs are reserved for energy efficient appliances or solar water heating systems.

Solar water heating loan program – KIUC

Kauai Utility Cooperative has teamed up with Kauai Community Federal Ceredit Union and Kauai County Housing Agency to offer a 0% interest loan for solar water heating systems. Repayments for the customers is on a 60 monthly payback schedule.

Solar water heating rebate program – KIUC

An $800 rebate per solar water heater system is available for homeowners in Kauai.

Energy solutions solar water heater rebate – HECO, MECO, HELCO

Residents that have installed solar water heaters are eligible for a one-time $1,000 rebate if they reside in areas of Maui Electric Company, Hawaiian Electric Company or Hawaii Electric Light Company.

Federal Tax Credit (Residential/Commercial)

Taxpayers and businesses are granted a personal tax credit of 30% of the total expenses, which include installation of residential solar panel installations (PV -electric systems), solar thermal systems, fuel cells and labor expenses.  Wind energy installations and geothermal pumps are also eligible for the tax credit.

  • Solar electric systems and solar thermal heaters have no limit to the incentive.
  • If there is excess federal tax credit, it may be carried over to the subsequent taxable year.
  • This may continue on through consecutive years until 2016, under which unused credit may or may not be expunged.

Federal Energy Conservation Subsidy Exclusion (Residential)

  • Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies.  
  • The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income.  
  • Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.

Energy-Efficient Mortgages (Residential)

With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.

Example: 4KW System – Residential Installation Cost

Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50

- Estimated System Cost: $26,000
- Federal/State Tax Credit: $12,800
- State/Utility Rebate: $0
- Net Cost: $13,200
- Cumulative Lifetime Savings (25 Years): $68,251
- Investment Return: 17.9%

Savings of 44% on the total cost of your solar system through incentives

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