2022 Hawaii Solar Incentives, Tax Credits, Rebates (And More)

Here’s a quick look at the solar incentives in Hawaii:

  • Federal Solar Tax Credit
  • Hawaii Solar and Wind Energy Credit
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 5/18/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Hawaii?

In this article, we’ll discuss the solar incentives and rebates available to Hawaii homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in Hawaii.

Jump to Section:

  1. Solar Rebates, Tax Credits and Incentive Programs in Hawaii
  2. Net Metering in Hawaii
  3. Federal Solar Tax Credit
  4. FAQ: Hawaii Solar Incentives
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Hawaii homeowners have the luxury of paying well below the national average for solar equipment, with a typical cost per watt of $2.67 and one of the smallest system size requirements in the country — just 5.5 kilowatts. Still, the total average price to install solar panels in Hawaii is $14,685, which will still be prohibitively expensive for many Hawaiians.

Luckily, the state and federal governments provide some incentives for going solar to entice property owners to make the conversion for their homes. These incentives reduce the upfront costs in some cases and improve the return on investment in the long run in others. In this guide, we’ll take a look at every solar incentive available in Hawaii and how each benefits taxpayers that go solar.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Current Solar Rebates, Tax Credits and Incentive Programs in Hawaii

The table below provides a quick overview of some of the major solar incentives available in Hawaii. We’ll include additional information about each further below as well.

Hawaii Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal tax credit is for 26% of your entire solar system cost, averaging $3,818 in Hawaii. This credit is applied to your federal income taxes due, so it’s one of the best tax incentives available for converting to solar.
Solar and Wind Energy Credit Hawaii’s Solar and Wind Energy Credit is a statewide tax credit in the amount of 35% of your total system cost. The max credit is $5,000, so most homeowners — who would normally pay around $15,000 for solar — will get near the maximum credit.
City of Honolulu Real Property Tax Exemption For residents of Honolulu, the property tax exemption guarantees that your non-educational property taxes won’t increase due to solar panel installation. In most cases, home improvements that raise your home value also bump up property taxes, so this is a wonderful benefit for Honolulu homeowners.
GEMS Hawaii The Green Energy Money Saver Program is an incentive for low-to-moderate-income households in Hawaii. This program provides access to solar at minimum upfront costs, with a small monthly payment added to the homeowner’s utility bills.

Hawaii Solar Tax Credit

The State of Hawaii’s Renewable Portfolio Standard (RPS) contains a lofty goal of producing 100% of the state’s electricity via renewable energy sources by 2045. To meet that goal, Hawaii offers the Solar and Wind Energy Credit, which is one of the best statewide tax credits available in the entire nation.

This credit — also called the Renewable Energy Technologies Income Tax Credit — provides a tax credit in the amount of 35% of your entire solar system cost, which is even better than the federal solar tax credit. In Hawaii, where the average system costs $14,685, 35% of the total cost comes out to $5,139. The Solar and Wind Energy Credit is capped at $5,000 per 5-kW installation, so most homeowners get the maximum value of $5,000 from this credit.

The credit is normally applied to your income taxes, and if the credit is larger than the sum you owed for the tax year, the balance can be rolled over to the following year and beyond. Homeowners can also choose to take the credit in full via check as a refund, but this yields a lower percentage of the total system cost and isn’t as valuable to most homeowners.

Other Hawaii Solar Incentives

Hawaii provides some great incentives for most homeowners — including low-income families — that make going solar far more attainable. In particular, the state focuses on making solar financing accessible to all residential solar customers and business owners. The most appealing programs are listed below:

  • Green Energy Money Saver (GEMS) Program: The GEMS program is designed to make solar loans available to homeowners who would otherwise be unable to attain financing. The loans are low-interest and typically require little or no money down. The monthly cost to pay back the loan is built into the utility bills after the system is installed to have minimal impact on the homeowner. The GEMS Hawaii program is available to low-income residents.
  • GreenSun Hawaii: GreenSun Hawaii is another program designed to bring affordable and attainable solar loans to all homeowners, businesses, nonprofits and owners of multi-family homes. The low interest rates and no-money-down options afforded by GreenSun Hawaii make solar more accessible than ever before.

Hawaii Solar Sales and Property Tax Exemption

Many states waive sales tax on solar equipment in an effort to lower the barrier to entry to clean energy production. Unfortunately, Hawaii does not have a sales tax exemption, so all homeowners will have to pay sales tax on their systems.

While the State of Hawaii as a whole doesn’t offer a property tax exemption for solar, the City of Honolulu does. Home improvements naturally increase the value of your home, which means your tax assessed value will increase and bump up your property taxes. Installing solar panels boosts home value quite significantly in most cases — as long as you buy or finance them — so property taxes will also increase. However, this is not the case in Honolulu, as the property tax exemption prevents taxes from increasing due to solar panel installation. 

Net Metering in Hawaii

Net metering is a policy that makes it easier for homeowners to eliminate their electric bills. Through interconnection via an inverter, electricity can travel between your solar photovoltaic (PV) system and the local electric grid. When your panels don’t produce enough energy to cover what you’re using, the grid provides the difference, and you’re billed for the energy. When your panels overproduce, you send electricity to the grid, and your bill gets credited.

Unfortunately, net metering is no longer available in Hawaii. However, the Hawaii Public Utilities Commission has approved a new rooftop PV system program that lets Hawaii homeowners benefit from new energy storage technology.1 With solar batteries added to your solar energy system, you’re far more likely to be able to reduce your energy bills to $0 per month, effectively providing the same benefit as a positive net metering program but at a higher upfront cost.

Local Incentives

In addition to the above state solar incentives, some Hawaiians will also have access to local incentives provided by their municipality or utility provider. Since the state doesn’t have a net metering program, in Hawaii, energy storage is a major factor when it comes to maximizing the benefit and return on investment of your solar power system. The Solar and Wind Credit is quite helpful, but most homeowners need more to cover costs. You can check the DSIRE database for local incentives like the Hawaiian Electric Battery Bonus.

The Hawaiian Electric Battery Bonus is a cash incentive for solar customers on Oahu to add a solar battery to their rooftop solar system. The battery incentive can be taken advantage of for new and existing solar arrays. The incentive varies depending on your battery’s output during peak electricity usage times, and it can total up to $850 per kilowatt-hour produced. A standard 5.5-kilowatt system could get more than a $4,500 cash incentive.

Hawaii Energy Co (HECO) also offers rebates for solar hot water installation, which some solar panel installation companies can include in their estimates as an energy-efficiency upgrade. You can check availability and the amount of the rebate for your water heater on HECO’s site.

Federal Solar Tax Credit

Finally, all Hawaii homeowners will have access to the federal solar investment tax credit (ITC). This credit is included alongside the Solar and Wind Credit, and is credited to your federal income taxes owed.

For most Hawaiians, a 5.5-kilowatt system is required to offset energy consumption. At an average per-watt cost of $2.67 in Hawaii, that’s an average system cost of $14,685. This yields a typical federal tax credit of $3,818, bringing your effective total down to a more reasonable $10,867.

It’s in your best interest to install solar as soon as possible, as the federal tax credit currently sits at 26% of your system cost but is scheduled to drop to 22% in 2023. For systems installed and turned on in 2023, the average credit will drop from $3,818 to $3,231. As of right now, the federal tax credit will no longer be available for residential systems in 2024, although this might change if Congress decides to renew the bill. In any case, installing solar sooner is more beneficial.

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FAQ: Hawaii Solar Incentives

The EcoWatch team is thrilled to get questions from Hawaii homeowners about solar incentives on a daily basis, as it shows how committed to renewable energy the state is as a whole. Below are some of the questions we see most frequently, along with our responses.

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Karsten Neumeister

Solar Expert

Karsten Neumeister is a solar energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the renewable energy sector of New Orleans, focusing on solar energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.