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Solar Power Rocks

Clear info on home solar power rebates, tax credits, and other benefits

Overall Ranking

B+

Average Savings

$90

Yes, Hawaii Allows for Solar Leasing

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Electric Bill Before Solar

$190

Electric Bill After Solar

$50

Est. Solar Payment

$50

Average savings

$90

Here's a typical electric bill before even considering solar panels. That's a nasty outlay of cash. Imagine what you could do with all that immediate savings above every month.

Doesn't this look a little better? Yes, of course it does. Imagine getting this bill in the mail instead. Whew!

Now, while you have a drastically cut back power bill, you now have a solar lease payment. Essentially, you're renting out your rooftop to a company who then pimps it out with solar panels. Then, you pay a lease payment to them for the power it produces. In each case, this payment added to your existing power bill will be lower than your previous bill, netting you instant savings with nothing down out of pocket! How awesome is that?!

Leasing vs. Investing in Home Solar

To lease, or not to lease? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.

In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!

Additionally, if you go the leasing route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar leasing company (after all, that's how they can afford to give you such a no-brainer proposition in the first place). A discussion of the performance payments follows.

RPS

40% by 2030

Grade: A

What's an RPS you ask? State legislatures pave the way for strong solar energy incentives to flourish. How? By stipulating standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS).

If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

RPS solar carve out

None

Grade: None

A solar “set aside” is a mandate the state sets in its RPS. This guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and as you can see above, some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2020. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2020. Pretty good. However, New Jersey also has a specific solar set aside of 2% by 2021. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is the hottest solar market right now!

State Interconnection

B

Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.

Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.

Electricity Prices

$0.33/kwh

Grade: A

The states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

State Solar Rebates

None

Grade: None

Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.

The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.

State Solar Tax Credits

35% Maximum varies.

Grade: A

While state tax credits are not technically free money, they can be an important factor consider, especially if you have some personal tax liability. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.

State Solar Property Tax Exemption

100% HNL only

Grade: B

Property tax exemption status is a pretty big factor when putting together your investment considerations. Solar will add approximately twenty times your annual electricity bill savings immediately to the value of your home upon installation. for many 5kW systems, that amounts to about $20,000. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!

The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade

State Solar Sales Tax Exemption

None

Grade: None

When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

State Net Metering

B

Grade: B

Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.

The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.

Solar Performance Payments

Less than or equal to 20 kW $0.218/kWh Greater than 20 kW, less than or equal to 500 kW $0.189/kWh Greater than 500 kW, less than or equal to 5 MW $0.197/kWh

Grade: F

Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.

If you don’t know what an SREC is, or how they work, check out this great SREC video

5kw Solar System Purchase Payback Time

9.6 Years

Grade: A

If you decide not to go with the leasing option, we've calculated the amount of time it would take for your home solar panel system to pay for itself if you put up the cost of the install out of pocket or financed it yourself. This calculation takes into account all the rest of the incentives below, and assumes you meet all the criteria to take advantage of them (e.g. - having a tax appetite, south facing roof with limited shade, etc.)

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Welcome to the Hawaii solar power information page – Details Section

We recommend starting here and reading up about what’s going on across the islands, then exploring further into our local resources in O’ahu.

If you have any questions, our network of solar experts are on call to assist you! Simply sign up for personalized help. You can get discounted pricing as low as $5,000/kW! This is paired with the very strong Hawaii solar panel incentives below.

From the sun to the surf to the black sand beaches, Hawaii is known for its pristine natural settings and beautiful weather. With all of those beautiful places to preserve, we can’t think of very many places we’d rather see protected with a healthy supply of renewable energy resources.

Not to mention the fact that all that sun makes Hawaii solar panels a natural power source. The state legislature has shown progress with a strong state tax credit and recent attempts to tweak relatively weak interconnection standards, but the laws still have a long way to go to be truly solar friendly.

However, because of Hawaii’s nation-leading high electricity rates, your new solar system will generate massive savings, regardless of any future legislative improvements. In fact, because of those high utility rates, solar power likely pays for itself faster in Hawaii than anywhere else in the United States. For that alone we really had to give Hawaii an A, even if there is still a great deal of room to improve.

Hawaii’s Renewables Portfolio Standard

A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.

Hawaii has a strong general RPS, mandating that 40% of all energy must come from renewable sources by 2030. That goal is being phased in; current policy calls for 10% renewable energy, increasing to 15% in 2015. 40% is a strong overall number. But the program could be even better if it had specific targets for Hawaii’s solar panels.

Hawaii’s RPS is critical to strong renewable energy policy. Utility companies don’t want you to produce your own power –it costs them money when you use less of their electricity—and they certainly don’t want to give you credit for your surplus. The only reason the utilities are aiding your transition to lower electric bills is because the state forces them to, to help meet the RPS’s targets. If the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.

Hawaii Solar Power Performance Payments

Hawaii does technically offer a cash-based Feed-in Tariff (“FIT”). If you opt into the program, your utility will pay you about 22 cents for every surplus kilowatt-hour (“kwh”) you feed back into the grid (i.e., if you produce more electricity than you use). Unfortunately the FIT is an optional program that replaces net metering (explained below). It’s one or the other sadly.

The FIT payments make sense if you are building a solar farm, but for a single-home residential Hawaii solar panels like our 5kw example, the Net Energy Metering (“NEM”) program described below is the better option for saving money; it won’t turn a profit, but you will get bill credits at the full retail rates. The most economically and energy efficient plan is to choose net metering and size your solar system appropriately to make sure you don’t generate more electricity than you use. The solar experts we work with can (and will!) help you do exactly that; plan a solar system that meets all your needs and eliminates your electric bill without generating unnecessary surplus to help the utility company.

Hawaii Solar Power Rebates

You can offset the cost of Hawaii solar panels through tax credits rather than through solar rebates. While there is no rebate for your solar power system, you can get $750 back on the installation of a solar water heater.

Hawaii Solar Power Tax Credits

Hawaii will in fact help you pay for the installation costs of your solar system, making it even easier to get to those amazing energy savings. You’ll just have to wait until tax day to collect that money. When tax day comes, you’re entitled to a credit of either 35% of the total installation cost of your system, or $5,000, whichever is less.

Tax Exemptions

When you add a solar power system, you add value to your home. How much value you add depends on how much money you save on your energy bill. In a state like Hawaii, solar panels can save you a lot – more than anywhere else in the country in fact.

Normally, as you are all too aware, an increase in your home’s value means a corresponding increase in property taxes. Many, if not most states exempt you from those property taxes. Hawaii sadly lacks such a statewide law. Don’t panic just yet though. The City and County of Honolulu has passed their own property tax exemption! No, that’s not the entire state, but it is about 70% of the people here in Hawaii.

If you’re one of those 70%, you’re already golden – you’re 100% exempted from property taxes associated with your new solar power system for 25 years. If you’re one of the unlucky 3 in 10, sounds like we all need to get on the phone to the state capitol to tell them we want solar power tax exemptions!

Seriously … that phone call might not be a bad idea, because Hawaii is slacking altogether on these tax exemptions. In addition to lacking a statewide property tax exemption, Hawaii fails to exempt Excise and Use Taxes for solar panels.

Hawaii does not have a true Sales Tax, but the General Excise Tax is built into the price of goods and services throughout the state. With one simple law exempting solar panels and their installation from such those taxes, the legislature could reduce the initial cost of solar systems by another 4-5%.

Utility Prices

Hawaii pays about 36 cents per kilowatt-hour of electricity. 36 cents! That’s more than twice the rates in the next most expensive state. If you live in Hawaii, we have no doubt that you hate how high your electric bill is every month. But frankly, those high rates are nothing more than an opportunity. Because you are currently paying more than twice as much as anyone else, that means you are going to save twice as much as anyone else; more than $2,600 in electricity costs, just in the first year! With absurd savings like that, your solar panels in Hawaii can pay for themselves in just a few years.

Net Metering and Interconnection

Net Energy Metering (“NEM”) is a key cog in any effective renewable energy policy. With net metering, the utility company must keep track of how much energy you produce and how much you consume. If you generate a surplus, every extra kilowatt-hour of energy you produce is carried over as a credit to future bills. The credit is at the full retail rate for electricity – currently about 36 cents/kwh.

That’s a pretty solid net metering law. Unfortunately your credits have a 12-month expiration date on them. Any credit unused after 12 months reverts back to the utility company without compensation. In other words, if you run a surplus for an entire year, the utility company gets to keep it. We are so not OK with that Hawaii. You need to follow the lead of states like Colorado and make the utilities cut a check for accumulated surplus at the end of the year.

Net metering may be decent in Hawaii, but interconnection standards are off the charts bad. We give the state legislature credit for trying to create simplified procedures for small renewables like residential solar systems, but the process is still too complicated, and you may be required to pay for an expensive Interconnection Requirements Study to determine if you will be allowed to connect to the grid. Even worse, the required installation of an external disconnect switch and mandated insurance coverage cost renewable-generating customers money. In the face of an overall system that strongly encourages Hawaii residents to switch to residential solar systems, it’s just plain silly to make it difficult and expensive to connect those systems to the grid.

Example 5kW (5000 Watt DC STC) Solar System Return on Investment in Hawaii

No, you don’t need glasses! Yes, you are seeing those numbers right! Now, before you run out the door to go find some solar panels and start slapping them on your roof, remember that these number are estimates. Your house is unique, and how much return you get on a solar power system depends on how much sun you get and what you pay for electricity, among other things. Those two factors can vary a bit depending on where in Hawaii you live. The best thing to do is to get one (or two, or three …) of our free quotes, and one of our expert partners can give you a much more exact estimate of how much money solar can save you.

In the meantime, let’s have a look at our general estimate, to get a ballpark of what you can expect:

Installing a typical 5kW solar system should run about $25,000. At least until the price starts dropping fast.

  • The state solar tax credit is capped at $5,000 and we qualify for all of it. Subtract that $5,000 for a new starting price of $20,000.
  • The feds offers the 30% federal solar tax credit on the cost after state incentives, so you take 30% off of the $20,000 price tag. Subtract another $6,000, for a new cost of $14,000.
  • Your annual electricity savings are an astounding $2,686. Once we subtract that, you are left with a final cost after year 1 of just $11,314. You’ve already saved 55% of the system costs, right off the bat!
  • Meanwhile, your home just went up in value $53,723. Wait … what?! 50 grand?! Yep. 50 grand. The increase in home value is estimated by calculating your expected energy savings overs 20 years (a conservative estimate for the life of your solar power system). Lots of electricity bill savings means lots of home value!
  • The planet will be thanking you too, since those solar panels on your roof are the greenhouse-gas fighting equivalent of planting 131 trees in your backyard. (Nice work!)

Getting back to your wallet though, solar panels in Hawaii should, on average, pay for themselves in just 4 years. 4 years! After that it’s all profit baby. A cool $116,623 of it over the life of your system.
To find out exactly how the numbers will work out for you, just drop your info into the form below and we’ll connect you to experts we trust here in Hawaii. They will calculate realistic estimates for you based on the uniqueness of your home and your energy usage. They’ll even do it for free!

The consensus on Hawaii solar power rebates and incentives

Hawaii is really in a class all its own when it comes to the money you can save by installing a solar power system, and the delightfully short payback timeframe. With the huge amount of cash you’ll save, and how fast you will save it, it’s impossible for us to give Hawaii anything but the full 5-sun rating.

Really though, the state virtually fell into that rating because of the high electricity rates. The rest of the landscape is less rosy … In fact, it’s pretty bad overall.

While the state tax credits are nice, the legislature should be doing more to encourage solar power. The tax exemptions should be extended, and we’d love to see tariff payments be paid in addition to net metering surpluses, as Renewable Energy Credits are in other states. At the very least, the net metering law needs to be amended to force utilities to pay you for yearly surpluses, and interconnection laws need to be vastly simplified and improved.


Our older archived Hawaii Solar Power costs and savings breakdown images for reference:

Hawaii Solar Power - Summary

 

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32 thoughts on “Hawaii Solar Power for your house – rebates, tax credits, savings

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  3. SB says:

    Another and maybe a better choice is to opt for a contract agreement with VIVINT or RevoluSun. These companies guarantee you 1/3 the savings of your current electric bill and lock in a max of up to 3% increase.
    No up front costs, take full responsibility for all liability to the system and damage if caused by their system and will give you the full system outright after 20 years.
    That is a better deal for some without the upfront costs.

    1. Anonymous says:

      do the math, 3% increase for the next 20years!???? not trying to bad mouth vivint or anything cause obviously they are doing something right!!! you cant look at your situation of now…you have to look at the long run and how much you will save…you will pay vivint for the next 20years by the time the 20 years is up you have spent anywhere from 80-300 thousand dollars depending on how big your system is in the long run…you finance and purchase your system you own it within 5 years and thats it…you dont have to worry about paying other solar company for your utility bill.

  4. denise says:

    I know that the federal tax credit can be carried over to another year if it is not all used in that year. What about state of hawaii? do they rollover the exemption?

  5. Blews says:

    I highly recommend using a liscensed Electrician versus the Flash in the pan Solar guys. In fact, many of these “Solar companies” outsource the installs and engineered drawings to Electrical Contractors. The good guys are going to have a licensed Electrician on site at all times. This is to ensure proper installation, afterall, the majority of failing panels is due to improper installs. Research not only pricing and product, but contractor and installation team.

    1. Solar HI says:

      Many of the “Solar companies” are in business because they have a high pressure sales staff that can sell overpriced options and convince homeowners that they need to commit ‘right now’ or miss out on the opportunity. They also love to sell leased system ($0 down!!) that cost $80,000 over 20 years rather than a customer owned system that ends up costing $15,000 after tax incentives. Most of that $80K goes out of state as lease payment to investors.

  6. Ruby says:

    Homeowners…if you are a licensed electrician or if you know one, you can pull the permit yourself. I,m a licensed electrician and I installed the system on my home myself. I saved thousands. I received quotes from my any different companies on Oahu and they all veried from 40k to 65k. My out of cost for materials was about 25k. I installed it by Myself after work and on weekends. It is not rocket science. But if you are not electrically or mechanically minded, I would advise against doing it yourself.

    1. Solar HI says:

      I did the same thing 6 years ago. The quotes were $48 to $52k and I had the equipment shipped here for about $30k. Now I’m in the biz as a licensed electrical contractor and can commission the same sized system (6kW) for less than $25k installed.

  7. Rosemary says:

    We are a solar thermal manufacture Solar Collector Inc. a leading to provide solar hot water lease+PPA program for residential and commercial owners. We are interested in Hawaii solar thermal rebate program, please contact us if there is any oppotunities of corperation. Thanks very much.

  8. ANDi says:

    Where exactly is the actual application for PV rebates if I am a home owner on Maui?

  9. lee says:

    It would be nice if they would allow homeowners to install there own systems and skip the overpriced contractors in Hawaii. It is not rocket science and the rebates are only good if you owe pay taxes and most actually get refunds instead. Most of the new solar snake oil salesmen are decendants of tin men.

  10. Eric says:

    We installed a solar PV system last year and received the Federal and State tax credits for it. The installer said that if we added more panels to it this year we could apply for the tax credit for that too. But our accountant said that it had to be a new, separately wired system in order to qualify for the tax credit. Who’s right, and how can I be sure?

  11. HawaiiWahine says:

    Hi guys, your site is helpful in our planning. I went to an open house on solar power at a neighbors. The sales person said the inverters are warrantied for 10 years. If those need replaced every 10 years, can you give me a ball park figure of what that would cost using your $35,000 system as an example? I’m looking at all costs before we jump in. Also wondering how how much CO2 is created during production of the parts that go into the system as well as during transport to Hawaii, to see if the C02 emissions over time are a real benefit to the planet. Any ideas on where I can check that out? He also said that adding batteries costs about 30% more. Is that about right? While the tariff feed makes sense economically, we would plan on being off-grid.

  12. solarawesome says:

    i think that comments dont actually go anywhere and yours are fabricated

    1. Dan Hahn says:

      Solarawesome (great name btw),

      You’re certainly entitled to your own opinions about where comments go, but we have no interest in fabricating what is posted on our site. Your comment included!

  13. Markharmon says:

    In Japan an estimated 10,000,000 homes use this technology to heat their homes. In North America solar water heating is quickly growing as the price of solar collectors fall and governments support the use of clean energy, financially. A hot water system is in most cases done using a close loop system with glycol mixture running through the primary side of a heat exchanger

  14. GEIGER says:

    The Hawaii Residential Solar Water Heater Installation rebate from Hawaiian Electric Co. has been changed from $1,000 to $750 beginning in 2010. I just missed the deadline. Ouch!

  15. Roger says:

    returning to hawaii – my home – wanting to buy a house and get solar panel and solar water heater installed, also have other ideas like collecting rain water. i’ve done intensive research on the installation of solar equipment. my question is this, it seems that the local company that installs these units seems to have increased their price to equal the states incentives. why is that? or is it just my imagination.

    1. Solar HI says:

      Not to mention the fact that solar panel prices have dropped but installed system prices haven’t kept pace.

  16. jim says:

    The State credit of 35% is still active

  17. Kristin Higgins says:

    Where can I keep up to date on the Feed-in Tariffs for Hawai’i – is the Dsireusa.org website the best? Thanks.

    1. Hi, Kristin. http://www.dsireusa.org/solar does indeed keep pretty close tabs on all state incentives. We do too, but we try to simplify the numbers and info, so check with them and us for further perspectives and explanation.

  18. Kevin Joyce says:

    Lot’s of panels available…prices have never been better..great time to invest in solar power!!

  19. Hawaii Solar says:

    Thank for the article. I also agree that Hawaii Solar energy is a very progressive way to solve our home needs, for example, recently I installed Solar Panels and now enjoy free natural energy!

  20. steve moore says:

    want to install solar panels get a electric contractor to hook up to box get hawaiian electric to hook up the meter will this work? and will i get all tax credits?

  21. Darrin says:

    we have 200 acre farm on the Big Island and would to perform feasibility study for solar farm. This is flat farm land and maybe 3-5 miles from the grid. We need advice and direction, financing options etc… any advice would be appreciated. or send response to dcampbell@thelandrumgroup.com

  22. lester chin says:

    I’ve been a taxpayer for the state of Hawaii all my working life of 35 years and am retired now and do not pay any state taxes. Why should I be penalized and not allowed a “refundable state tax credit” if I decided to install a solar water heating system?

  23. Victor says:

    I’m not interested in solar water heating. I live on the Big Island and with the vog, most of my neighbors on solar water are taking cold showers. What about solar power incentives and again, with this ever present vog, is solar still feasible.

  24. Dawn says:

    What if I live on the Big Island? Off the grid?

  25. Mapu says:

    GUy, so expensive ur guys systems for solar stuffs

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