Hawaii State Solar Power Rebates, Tax Credits, and Incentives

Sunset on Ulua Beach, Wailea, Maui

Solar Legislator Score

Updated 1-04-10

Aloha, and welcome to one of the lands of the sun, surf….and imported oil and gas.

The islands of Hawaii are paradise, so it’s ironic that most of its energy is totally dependent on millions of barrels of imported oil and gas for electricity and hot water. Having your energy imported makes Hawaii utility prices extremely expensive, not to mention hurt the environment and put its pristine beaches under water as global warming trends continue to melt ice off glaciers and slosh the extra H20 onto Hawaii beaches.

Realizing the energy poi was hitting the fan, the Hawaii legislator has recently caught the wave of solar thermal (solar hot water) and solar photovoltaic (solar electric) potential. Wind too, but since we’re SolarPowerRocks.com, so we’ll be ignoring those incentives.

Regardless of where you live, you can’t get a residential building permit without getting a solar water heater (SWH) for your newly built or modified home or business. There are variances that are allowed:

• You don’t have enough sun.
• You use so little hot water that it doesn’t make financial sense, meaning, your estimated payback has to be within 15 years.
• You install solar PV as the primary energy source for heating water (However, the State will reduce your solar PV rebate from $5000 to a maximum of  $2,250 if  you get this type of variance.)
• You install  a gas-tankless instantaneous water heater instead. (These are good, but watch those gas prices fluctuate. Last I check, sunlight was free after that initial solar panel cost.)

Let’s go through incentives, shall we?

Net Metering

The entire state of Hawaii is net metered. That’s maika’i loa, eh, because it means that when your solar system produces more energy during the day while you’re at work, the utility keeps track of any excess. Then at night, you get to draw from that excess and the electric company credits your account. It’s like having a virtual battery back-up.

One caution, however. If you oversize your system and your solar system produces more electricity than you use over the year, the utility just zeros out your bill and does NOT pay you for the extra. However, that may be fixed with the new Feed-in Tariff….

Hawaii Solar Rebates and Incentives

Solar Cash Rebates

• $1,000 for residential solar hot water systems installed in the HECO, MECO or HELCO.
• Commercial customers receive $125 per deferred kW, plus $.05/kWh for retrofits and $.06/kWh for new construction. That can add up to a lot of rebate money if you’re, say, a laundry-mat or hotel using lots of hot water. How much? That will depend on your usage. Check with one of our partner installers for a free estimate. Couldn’t hurt.
• For Kaua’i Island Utility Cooperative, residential rebate is $800; Commercial is 50% – 80% of equipment costs. However, the utility must visit your home or business before installation to ensure that the equipment will be cost effective. In other words, they want to make sure you’ve got enough sun to heat water before they fork over 800 bucks.

Hawaii Feed-in Tariff

Hawaii is one of the few states now offering a cash Feed-in Tariff. What’s a feed-in Tariff? Essentially, the utility has to pay you cash/kWh of solar energy that your system produces.

• How much? As of the writing in early January 2010, that’s yet to be determined, although keep checking this site for any updates. What is known right now is that it will be a fixed rate that’s set for 20 years.
• To give you some idea, Vermont is now paying 30 cents/kWh produced, but I wouldn’t count on any price, higher or lower, until I see it.
• All investor-owned utilities, HECO, MECO and HELCO, are participating.
• Check with your installer about the latest news.

Hawaii Solar Tax Credits

Tax credits aren’t the same as a cash rebate that lowers your upfront cost, but they do lower the net cost of your system through not having to your tax bill. Think of a tax credit as like a gift card to pay your State or Federal income taxes. On top of the Hawaii Solar Tax credits, you also qualify for an additional 30% solar investment tax credit from Feds that you can apply towards your Federal tax bill to Uncle Sam.

Hawaii Solar Hot Water (Thermal) State Tax Credits

If you’re a residential developer of single family homes or regular home owner and reading this right now, as of 1/1/10, you’ve missed the State tax credit for solar hot water unless you bought it by midnight 12/31/09.  However, the 30% Federal Solar Tax Credit is still alive and kicking for you, plus the above mentioned rebates.  In addition:

• 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.

Hawaii Solar Photovoltaic (“PV” or “solar electric”) State Tax Credits

For Solar PV systems, the maximum allowable state tax 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;
• Multi-family residential property is eligible for a credit of 35% of the actual cost or $3,50 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.
• Note: Your tax credit for solar PV systems can be “refundable” (cash back from Hawaii!) if you meet certain conditions.  First, you need to reduce the eligible 35% or the $5000 max tax credit by 30% ($1,500 max.) If this reduced amount ($3,500 or less) exceeds the amount of income tax you owe, then the excess credit will be refunded ($). Also, if you’re really retired with your entire income exempt, or you’re really poor with an income less than $20,000  ($40,000 filing jointly), you can get the full tax refund. Check with your tax office for more information.

Cost example of an average 5kW PV Residential system with 120/month average bill.

Before State and Federal an average 5kW (5000 watt) PV system will run:

• $35,000, assuming a $7/watt installed price (5000 watts x $7/watt.)  But don’t panic!
• Subtract $5,000 for the State tax credit
• Subtract another $10,500 for your 30% Federal Tax credit. (Since the Hawaii solar tax credit is not a cash rebate, this can be calculated off the gross price.)
• Subtract Feed-in Tariff production incentive (To be Determined)
• Not including the Feed-in Tariff, your net cost is $19,500.
• Not including the Feed-in Tariff, your payback is 13.9 years, but this will be substantially lower with the Feed-in cash payments.
• Not including the Feed-in Tariff, your former $120/average monthly bill is now an average of $22.16/month with solar.

Obviously, as soon as the Feed-in Tariff is set, all of these estimates will go down. Also, keep in mind that a 5kW system is just an example. Your energy usage may be substantially higher or much lower.

Example of Hawaii Residential Solar Water Heater Install:

Honolulu Million Solar Roofs Loans

The Honolulu Solar Roofs Loan Program is made possible through a partnership between Hawaiian Electric Company (HECO) and The City and County of Honolulu. The program offers low-interest loans (0% or 2%) to income-qualified homeowners on the Island of Oahu for the installation of solar water heating systems through the City’s Rehabilitation Loan Program. The contract occurs between the City and County of Honolulu, who provides the funding, and the customer with HECO facilitating the installation of the solar hot water heaters.

The low-interest loans are available for single-family homes, condominiums, and coops. The maximum loan is $80,000 for each dwelling unit for owner-occupied properties up to 4 dwelling units not to exceed $125,000 per property. For all other properties, the maximum loan amount is determined by a formula. Most solar hot water heater installations cost approximately $4,000 to $5,000. Loans will be secured by a promissory note and a mortgage on the property.

Qualification is dependent on income level (guidelines available on program website). Landlords must rent their properties to tenants who fall within the income limits set by the City. Visit the City and County of Honolulu FAQ website for more qualification guidelines.

For more information, check out the City and County of Honolulu website to download an application.

Maui Million Solar Roofs 0% Solar Loans!

Maui County’s Solar Roofs Initiative Program provides for interest free loans for those who want to install a solar water heater! In a joint effort between Maui County and Maui Electric Company, loan recipients are also eligible for a $1,000 discount.

What about Kauai? They got a nice program too! Through a partnership with Kauai Community Federal Credit Union (KCFCU) and Kauai County Housing Agency (KCHA), the Kauai Island Utility Cooperative (KIUC) also provides qualifying members with interest-free loans for solar water heating systems. KCHA, through funding from the Community Development Block Grant Program, and KCFCU provide funding for the loans. KIUC pays the interest, markets the program and verifies that systems will meet Energy Wise program standards for sizing and installation.

Participants pay the loan back to the lender with 60 monthly payments (no down payment is required). KIUC pays the interest on the loan directly to the lender for the customer. Participating members also make their monthly payments directly to the lender. There is no maximum loan amount; however, commercial systems are not eligible.
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USDA Loans and Grants (Need to meet “rural” specs.. e.g., Molokai)

• To qualify as a small business, a company must have fewer than 500 employees and make less than $6 million a year.
• Grants can only constitute 25 percent of the project, and must range between $2,500 and $500,000 for renewable energy projects and $1,500 and $250,000 for energy efficient improvements projects. Any renewable energy project under $10,000 means that the farmer in question has to foot the bill.
• As for loans, they can make up no more than 50 percent of a project’s total cost and must range between $5,000 and $10,000,000.
• Eligible renewable energy systems include biomass, wind power, solar power, an anaerobic digester (which converts things like livestock waste into energy), and geothermal power.

For details on project and applicant eligibility, application procedures, required forms and other useful information to assist you in the application process, click here.

Consensus

Hawaii definitely has a lot of incentives to get moving with solar power. They’ve got bold plans for energy efficiency and the state is really putting money where its mouth is in terms of reducing reliance on outside oil. Other states could learn quite a bit from Hawaii’s plans and incentives for businesses and homeowners.

Click here to get hooked up with a local solar installer for your home or business