Welcome to the Hawaii solar power information page
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
From the sun to the surf to the black sand beaches, Hawaii is known for its pristine natural settings and beautiful weather. We can’t think of many places we’d rather see protected with a healthy supply of renewable energy resources.
All that sun makes Hawaii an ideal location for home solar panels. The state legislature has shown progress, creating a strong state tax credit and fruitful tweaks to relatively weak standards for connecting your panels to the grid, 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.
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 $4,500/kW! This is paired with the very strong Hawaii solar panel incentives below.
Guide to the Hawaii Page
We've designed this page to be the most complete guide to the complicated and sometimes confusing process of installing home solar panels in Hawaii. Since there's a lot of important information to consider, we've separated the page into logical sections to help you find what you are looking for. If you find this page useful, please support us by forwarding it to someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in Hawaii. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Hawaii. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Hawaii is doing to make solar more affordable for its citizens, you'll find it here.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Hawaii Solar Strategy|
|Comparing Solar Investment Options|
|Hawaii Solar Leases|
|Hawaii Solar Loans|
|Buying Solar in Hawaii|
|Solar Purchase Payback Time in Hawaii|
|Hawaii Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Hawaii
Figuring out the best way to go solar in Hawaii can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in Hawaii
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment.
The very best way to go solar in Hawaii is to take a home equity line of credit (HELOC). You'll put nothing down; you'll get giant tax credits from the Feds and the state at the end of year 1; and you'll save more money every year on your electric bill than you'll pay for the loan. It's an absolute no-brainer, like investing in a company you know is gonna succeed.
The final option—the one with the smallest savings—is for a solar lease or PPA. If you can;t get a loan, or don't have equity, it may be the only option. You'll put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. Leases and PPAs are an excellent option if you don't have any equity or cash to put down.
Read on to get detailed information about each option.
Solar Leases in Hawaii
Hawaii is the rare state where solar leasing isn't a runaway 1st choice. That's because electricity prices are so high here that paying for solar a different way is monumentally better.
That's not saying that leasing is a bad idea—far from it, actually—and if you don't have a ton of cash or equity in your home, you can still save tens of thousands over the course of a 20-year lease.
For now, leasing a solar system can save you over $100 per month, which adds up to big money over a 20-year term.
Here's how a solar lease works:
Example Lease savings in Hawaii
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
The numbers above show the savings with a solar lease for an average home in Hawaii. The typical electric bill before solar power is super expensive, but with a solar lease, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's how a solar lease saves you money:
With a lease, you're essentially renting your rooftop to a company who wants to install and maintain solar panels on it. You make a monthly payment to them and get all the power the system produces. The payment plus you new, lower power bill will be lower than you used to pay, netting you instant savings with nothing down out of pocket! How awesome is that?!
A PPA, on the other hand, is just what the name says. Your roof still plays host to the panels, but you pay only for the electricity the system generates, at a cost lower than what you've been paying GiantCo utility company. The money you save is only limited by how much sun your roof gets!
Here's the best part: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in Hawaii. If you're ready for a custom quote for a solar lease, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Home Solar Power: Leasing Vs. Purchasing
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).
Solar Loans in Hawaii
Did you ever see that Matthew Lesko guy on late-night TV? He had an informercial all about how the government is giving away free money, and he was basically begging people to buy his book that told you how to get all that sweet gubmint cash. Buying solar with a loan in Hawaii is kinda like that, but, y'know... not insane.
This is without a doubt the best solar option when it comes to return on investment. That’s because it relies on using someone else’s money for the purchase price, which is paid back over time with electricity savings. We know you hate your electric bill, and in Hawaii, solar will take out a huge chunk of it—enough that it will pay for itself on day 1, because your savings will always be greater than your costs.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a home-equity line of credit (HELOC) for $20,000, repaid over 15 years or so.
- You love making tons and tons of money without much risk
The reason this works so well is that you don’t have to put any money down, but you still get all of the incentives that go along with buying solar. You'll get the 30% federal tax credit, the $5,000 Hawaii tax credit, and the immediate energy bill savings. Your loan payments will be less than those energy bill savings, so you'll end up saving money right away—about $17/month in the first year. That difference will increase each year as electricity prices rise, but your system will keep on producing about the same amount of electricity.
Here’s how the numbers pencil out for a Hawaii solar purchase with a HELOC:
- Installing a typical 5-kW solar system should start at about $20,000. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $2,106, but your loan payments will total $1,898, for a difference of $208, or about $17 per month.
- On top of that, your tax savings for the year will be $11,000! You'll come out $11,208 ahead after year 1, which is so crazy that we're thinking about moving to Hawaii right now.
- You'll never actually spend that a penny on loan payments. And after the loan is paid off, your profits stack up just like if you bought the system outright. You'll end up with $64,560 in profits over our 25-year example.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 127 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Hawaii. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in Hawaii
An outright purchase used to be the only way to get solar, and it's still the option that provides the best dollar-for-dollar returns. The reason it's so great is that you own the system from day one and reap all the benefits. The Federal and State tax credit and electricity savings bring your first-year costs way down.
In our example, you put down $20,000 up front, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced over $73,000 in income, thnaks to all the money you'll be saving on electricity. SEVENTY-THREE THOUSAND!!
But even though that sounds huge, look into the HELOC option, because taking a loan to buy an income-generating asset means it'll pay for itself starting on day 1, and you'll actually be making money as you pay the loan off.
Here’s how the numbers pencil out when you pay up front for a 5-kW rooftop solar system in Hawaii:
- Installing a typical 5kW solar system should start at about $20,000. Don’t worry – even without state rebates, your first-year costs will be considerably less than that.
- Since the Feds calculate their incentive based on actual out of pocket costs, the lack of a California rebate means a bigger federal solar tax credit. Subtract $6,000 (30% of $20,000) for a new price of $14,000.
- The Aloha state gives you a nice tax break, too. This 5-kW system is eligible for the full $5,000, so now you've only invested $9,000 after year 1.
- On top of the tax credits, you get to save a bundle in electricity costs. Subtract your first year’s energy savings, which we estimate to be about $2,106. That reduces your cost after the first year to only $6,894.
- Over the 25-year life of your system, you'll see a total net profit of $73,028, after the system pays for itself.
- And don't forget... your home's value just increased by over $42,000, too (your expected annual electricity savings over 20 years)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 127 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Hawaii. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Hawaii Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Hawaii:
100% by 2045
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.
In 2015, Hawaii kicked its pursuit of renewables into the highest gear possible. The state now has a goal of 100% renewable energy generation by 2045, up from its earlier goal of 40% by 2030.
The 100% goal is being phased in by the following schedules:
- 15% of net electricity sales by December 31, 2015
- 30% of net electricity sales by December 31, 2020
- 40% of net electricity sales by December 31, 2030
- 70% of net electricity sales by December 31, 2040
- 100% of net electricity sales by December 31, 2045
Hawaii is setting the pace for the nation, and it's doing it because the switch to renewables is so necessary. Much of the energy generation in Hawaii is done with imported fuel oil and other fossil generation. That's why the state has such terribly high electricity prices—shipping in all that fossil fuel is expensive.
Hawaii also has a good chance at meeting its 2045 goal, too, considering its natural wind, solar, and geothermal potential. Let's all give a cheer for Hawaii and its forward-thinking governor, David Ige! Hip-hip hooray!
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting 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.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner.
RPS solar carve out
You'd think with a goal of 100% of electricity from renewable source, we might see a specific requirement for solar here, but that's not the case. Not to worry though, since Hawaii has high electricity prices and a great solar tax credit, the possibilities for huge savings with home solar are better here than in almost any other state.
What's a solar set aside? A solar set aside 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 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 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Hawaii Electricity Prices
Hawaii pays about 30 cents per kilowatt-hour of electricity. 30 cents! That’s nearly 50% higher than 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. And that $.30/kWh rate is actually greatly reduced from last year, because fossil fuel prices have dropped so precipitously since 2014.
When you're talking about solar, Hawaii's high electric rates are nothing more than an opportunity. Because you are currently paying so much more than anyone else, you are going to save so much more than anyone else. A Hawaii homeowner with a 5-kW system will see more than $2,100 in savings on 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.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, 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.
Hawaii Net Metering
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 39 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.
What is net metering? 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.
Hawaii Interconnection Rules
Net metering may be decent in Hawaii, but interconnection standards are too complex and can be a big hassle. 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.
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.
Solar Incentives in Hawaii
Hawaii Solar Power Rebates
Hawaii utility companies offer no rebates for getting solar installed on your home. Usually, we'd be crying in our poi about that, but the state does have a really excellent tax credit that will get you up to $5,000 back when you go solar, so no worries!
How do solar rebates work? 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.
Hawaii Solar Power Tax Credits
35% or $5,000
Here's where Hawaii wins when it comes to solar. If you buy a solar system in the Aloha state, you'll see 30% of the cost come back as a credit at tax time. When April 15th rolls around, you'll be entitled to a credit of 35% of the total installation cost of your system, up to a maximum of $5,000.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
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.
Solar Power Performance Payments
Sensible for solar farms only
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 huge solar farm (a greater than 20kW system), 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.
Explanation of performance payments: 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 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
Property Tax Exemption
100% HNL only
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.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). 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 also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
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%.
What's the deal with solar power sales tax exemptions? 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).
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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 hard for us to give Hawaii anything but the full 5-sun rating.
Really though, the state gets such high marks only 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.
With the improvements we recommend, Hawaii would be an A+ for solar. In fact, if your tolerance for messing around with utility company rules is high, it already is. Of course, if you’d like some personalized assistance from someone who’s in your corner, get in touch with us and we’ll have an expert contact you in a jiffy.