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.
Electric Bill Before Solar
Electric Bill After Solar
Est. Solar Payment
First, take a look at a typical electric bill before considering solar power. That's a nasty outlay of cash. Imagine what you could do with all that immediate savings above every month.
As a result of what state legistlatures in leasing states have accomplished, you could instead save a bunch of cash. Imagine getting this bill in the mail instead. Whew!
Now, while you have a drastically cut back power bill, you also 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. Buying 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 (see the bottom of the page under "5kw Solar System Purchase Payback Time") 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.)
40% by 2030
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 and 25% in 2020. 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.
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
Hawaii state legislators could make some very large improvements in the RPS standards today, if they wanted to. For instance, they could create a “solar carve out,” or a percentage of generation that has to be met using residential solar power. If the Hawaii RPS standards included a solar carve out, like states such as Nevada or Colorado have, utility companies here would be much more willing to offer solar incentives to homeowners.
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 39 cents per kilowatt-hour of electricity. 39 cents! That’s nearly 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 $3,000 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.
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 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.
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
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.
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.
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).
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
Time it Takes for 5kW of Solar Power to Pay for Itself
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 offer a 30% federal solar tax credit on the cost after state incentives, so you take 30% off of the $20,000 price tag, or $6,000, for a new cost of $14,000.
- Your annual electricity savings are an astounding $3,042. Once we subtract that, you are left with a final cost after year 1 of just $10,958. You’ve already saved 56% of the system costs, right off the bat!
- Meanwhile, your home just went up in value $60,840. Wait … what?! SIXTY grand?! Yep. Sixty 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 141 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 $116,137 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 here 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!
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.
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).
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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.