Living in Hawaii isn’t just about sun-kissed beaches; it’s also a paradise for those considering investments in renewable energy solutions. The state’s strong commitment to renewable energy, coupled with its traditionally high utility rates, present an opportunity for substantial savings. With an ambitious goal of achieving 100 percent renewable energy by 2045, Hawaii has introduced numerous incentives to turn this vision into reality. Residents who meet the criteria stand to benefit from Hawaii’s robust solar incentive programs, potentially saving over $10,000.
The popularity of solar panels in Hawaii continues to rise, thanks to the abundant sunshine that allows residents to harness solar power to meet their electricity needs while avoiding the environmental issues associated with fossil fuels. This, in turn, leads to a decrease in electricity bills, ensuring long-term cost savings. The state of Hawaii sweetens the deal by offering a variety of financial incentives, including tax credits, grants, and loans, making solar installation financially feasible for its residents.
What Incentives Are Available for Hawaiian Residents?
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Renewable Energy Technologies Income Tax Credit - A major incentive for Hawaii taxpayers who own solar panels. This substantial credit reduces state income taxes by 35% of the approved system cost and installation, with a maximum value of $5,000 per system. It is a one-time assessment during tax filing after installation, and any unused credits can be carried over to subsequent years. This credit can be stacked with the ITC for additional savings.
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Federal Solar Investment Tax Credit (ITC) - Provides a credit to your income tax liability for 30% of your entire conversion cost. This includes panels, batteries, inverters, and labor. Assessed once during tax filing after installation, with unused credits carrying over for up to five years in total. On average, participants receive $4,406.
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Community Renewable Energy Program - Allows homeowners access to community solar with a credit for all consumed energy. Enrolled customers continuously receive bill credits for the energy they pull from their community solar farm. Recipients receive $19,116 in credits on average, based on consumption and location.
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GreenSun Hawaii - A solar financing option that minimizes interest rates and offers longer terms than loans offered outside of the program. The program’s goal is to provide financing options that will result in lower monthly payments compared to the customers' current utility bills.
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Green Energy Money Saver (GEMS) Program - A financing program for low-income households, making solar energy systems more affordable and accessible. Participating customers can conveniently pay back the cost of installing solar equipment through their monthly utility bill with no upfront costs. The minimum financing amount for residential customers is $5000, with no specified maximum limits.
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Battery Bonus Program - This program pays a cash incentive and bill credits to residential and commercial Hawaiian Electric customers who add battery storage to their solar systems. Participants must commit to using and exporting a set kilowatt amount for two consecutive hours daily. In return, they can receive three types of incentives: a one-time check for up to $4250, a monthly capacity bill credit of $25 for the 10-year duration of the program, and for non-Net Energy Metering customers, and a monthly export bill credit averaging $63. No new applications for the Battery Bonus program are being processed on Oahu as it has reached its maximum capacity of 40 megawatts. However, the program will remain available to Maui customers until June 30, 2024, or until a cap of 15 megawatts is reached.
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Bring Your Own Device (BYOD) Program - Building on the success of the Battery Bonus program, a follow-up program, BYOD, will be open to Hawaiian Electric customers starting on March 1, 2024. This program provides incentives for customers to incorporate battery storage into new or existing solar systems. Participants are eligible for a one-time upfront payment of up to $500, or $1000 for those with low and moderate incomes. Additionally, there is a monthly capacity incentive of $5 to $10 per kilowatt depending on the level of commitment. Customers can also accumulate bill credits for controlled energy exports during specific periods designated by Hawaiian, referred to as BYOD events.
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Net Energy Metering (NEM) - ONLY AVAILABLE TO CUSTOMERS WITH EXISTING NEM AGREEMENTS - The program provides credits towards future electric bills for any surplus energy generated by their systems and fed back into the grid. Participation in NEM can result in an average lifetime savings of just under $50,000. Hawaii also recently introduced the NEM Plus program, allowing NEM participants the flexibility to install new panels, battery storage, or a combination of both.
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Local Incentives - Rebate programs and other incentives are offered by utility providers, specific cities, and other local entities. The savings vary based on the incentive, system size, and location.
Who Can Apply?
Homeowners and some renters may qualify for federal and state tax credits for renewable energy-related expenses. These tax credits apply to various energy-efficient appliances, such as solar panels for generating electricity, backup power battery storage for home (with a capacity exceeding 3 kWh), solar water heating systems, and other approved energy efficiency enhancements.
Combining Incentives with the ITC
The Clean Energy Investment Tax Credit (ITC) is available nationwide, providing property owners and occupants who install solar panels in residential or commercial properties with a federal tax credit equivalent to 30% of the project costs. While the incentive extends to secondary homes, landlords or other property owners who do not reside in the home are ineligible to claim the credit.
For those looking to install a solar system, the potential for savings is significantly enhanced by combining the various solar incentives with the ITC. This approach ensures that the financial benefits are maximized while contributing to a more sustainable and eco-friendly future. For more detailed information, it is recommended to consult with your tax advisor or accountant.
Steps to Leverage the ITC:
Claiming the federal credit is straightforward, but consult your tax professional to ensure eligibility. When you're ready to benefit from this advantage, follow these steps:
- Step 1: Complete your home solar project.
All receipts for labor and equipment should be kept on hand for filing purposes when claiming these credits come tax time.
- Step 2: When you’re ready to file your taxes for the year you converted to solar, fill out IRS form 5695, which is for claiming residential energy credits.
Any individual or corporate taxpayer who is eligible to claim the renewable energy technologies income tax credit for 10 or more systems or distributive shares of systems installed and placed in service in a single tax year must fill out Form N-342 and attach it to their state tax return
- Step 3: Fill out the form(s). You’ll need system capacity information, the total conversion cost, information about your installer, and personal information.
- Step 4: File the completed form alongside your taxes, or have your accountant include the form(s) in your filing. If you use filing software, your tax software will ask whether you’ve completed a home solar project and guide you through the process of claiming the tax credit.
Sunny Savings
Hawaii boasts more attractive solar programs than most other states. With solar incentives and rebate programs, Hawaiian taxpayers have the potential to save over $10,000 upfront. This means solar systems pay for themselves much faster leading to boosted energy savings over time.
Currently, over 17% of Hawaii’s energy is powered by solar and this number is expected to grow. By installing solar systems and leveraging these incentive programs, residents of Hawaii can actively contribute to a sustainable future while enjoying the financial benefits of abundant sunshine for years to come.
References
https://www.eesi.org/obf/case-study/hawaii
https://www.ecowatch.com/solar/incentives/hi
https://www.forbes.com/home-improvement/solar/hawaii-solar-incentives/
https://www.forbes.com/home-improvement/solar/hawaii-solar-incentives/
https://www.forbes.com/home-improvement/solar/hawaii-solar-incentives/
https://www.hawaiianelectric.com/products-and-services/customer-renewable-programs/rooftop-solar/battery-bonus
https://www.revolusun.com/battery-bonus/
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