Is Solar Worth It in Hawaii? (2022 Homeowner's Guide)

Here’s a quick overview of solar viability in Hawaii:

  • Hawaii ranks 17th in the country for solar installations.*
  • The average cost of electricity is 30.28 cents per kilowatt-hour.**
  • The average solar payback period is 6 years.***
  • Homeowners are eligible for the Solar and Wind Energy Credit and the federal solar investment tax credit (ITC).
  • The average homeowner saves $49,458 over the lifetime of their solar system.***

*According to the Solar Energy Industries Association.1
**Data from the Energy Information Administration.2
***Calculated assuming the system is purchased in cash.

Ecowatch Author Dan Simms

By Dan Simms, Solar Expert

Updated 5/22/2022

Why You Can Trust EcoWatch

Our solar experts have conducted hours of research and collected dozens of data points to determine whether solar is a good fit for homeowners 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. 

Is Hawaii Good for Solar Energy?

In this article, we’ll discuss whether solar is worth it for the majority of Hawaii homeowners, but whether solar panels are worth it will ultimately depend on your home’s configuration and your energy needs. To speak with an EcoWatch-vetted professional who can help you determine whether solar is worth it for your Hawaii home, follow the links below.

Jump to Section:

  1. Figure Out if Solar Panels are Worth It in Hawaii
  2. Benefits of Solar Energy in Hawaii
  3. What to Look Out For When Considering Solar in Hawaii
  4. Is Solar Worth it in Hawaii?
  5. Frequently Asked Questions

 

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Hawaii ranks 17th in the US in terms of solar adoption, but solar panels are more valuable in the Aloha State than just about every other area in the country. This is due, in large part, to the fact that Hawaii has the highest electricity rates in the nation and receives an abundance of direct and intense sunlight.

Below, you’ll find the criteria you can use to determine if solar is a good investment for your Hawaii home. We’ll also explain the benefits of going solar in HI and some things you can consider to ensure you have the best conversion experience possible.

How to Figure Out if Solar Panels are Worth It in Hawaii

Solar panels are abundantly worth the investment for most Hawaii residents, but that doesn’t mean they’re right for everyone. There are quite a few things you’ll need to consider before deciding if you’ll benefit from going solar. We’ll discuss the most significant factors to think about below.

What’s Your Home Electricity Consumption?

Solar panel systems are valuable because they offset electric bills. As such, they’re most useful in areas with high electricity rates or where energy needs are unusually high. Generally speaking, homes that use at least 500 kilowatt-hours will find that panels are cost-effective. You can check your monthly energy consumption on your past electric bills, where you’ll often see consumption for the past 6 to 12 months. The typical home in Hawaii uses only 537 kWh monthly, so from a pure usage standpoint, solar doesn’t appear to be particularly valuable. However, Hawaii is a special case because residents are hit with the highest energy rates in the country at 30.28, more than double the national average of 13.15. This means that, despite the low consumption in Hawaii as a whole, the majority of homeowners will still find that solar panels are more than worth the investment.

How Much Is It To Go Solar in Hawaii?

The average price for solar panels in Hawaii is around $2.67 per watt, which is just a touch above the national average of $2.66. However, Hawaiians enjoy a much lower total for converting to solar due to the smaller-than-average system size requirements. Compared to the national average size of 11.5 kilowatts, Hawaii residents typically need just 5.5 kilowatts installed, making the average all-in price around $14,685 or $10,867 after the federal tax credit. Solar provides the most value per watt where energy bills are high, so the combination of the highest electricity rates and the relatively low price of going solar makes Hawaii one of the best places overall to go solar.

What’s the Payback Period for Solar in Hawaii?

Most residential solar systems pay for themselves in energy savings. The time it takes for this payoff to occur is called the solar panel payback period, and it determines how long it takes you to see an actual return on investment for your panels. The average payback period in Hawaii is just 6 years, which is half the national average of 12 years. Most Hawaiians start realizing a return on investment between 3 and 9 years. If you use a solar calculator to estimate your payback period or have a reputable solar installer calculate it for you and you come up with more than 9 years, your overall ROI will be lower than average. Since Hawaii is one of the best places in the country to go solar, even longer payback periods will still likely provide sizable savings, but shorter payback periods will always be more beneficial.

What Are Average Buy-Back Rates in Hawaii?

Most states at this point have mandated net metering to help homeowners or an electricity buy-back program, which incentivizes solar conversion with the opportunity to overproduce energy with your panels and sell the excess back to the electric company either for a credit on your bill or a cash payment. Unfortunately, net metering used to be mandated in Hawaii but is no longer. The lack of net metering means the average ROI on solar panels is lower than it could be. As such, most Hawaii homeowners will want to couple their panel installation with a solar battery system to offset electricity prices at night or during cloudy days when production is limited. Battery storage solutions will add quite a bit to your total installation cost, but it’s typically well worth the investment in an area like Hawaii, where electricity is so expensive.

How Much Sun Does Your Roof Receive?

Solar panels are also more valuable in areas where sunshine is abundant, as longer production hours mean more energy costs offset and more savings overall. Hawaii receives an average of 240 days of sunny weather annually, which is well above the national average of 205 sunny days. Once again, Hawaii is ranked as one of the best states in the country for solar panel installation. There are some property-specific factors you’ll need to consider, though, as not every home receives the same amount or intensity of sunlight. Homes with south- and west-facing roofs will be best suited for solar conversion, as these roof directions are best for capturing sunlight in the US. Shading on your property can be an issue as well. Homes with roofs that are shaded by trees or nearby buildings will benefit less from solar conversion due to reduced energy production.

What’s the Outlook on Solar in Hawaii?

The solar market in Hawaii has remained more or less stagnant over the past decade, and installations are actually a bit less frequent now than they were ten years ago. While Hawaii is a prime example of showcasing the value of solar panels, the state policies have restricted solar adoption quite a bit. The state incentives are generally good, but there have been restrictions placed on how much energy you can send back to the grid through interconnection, so many residents have opted out altogether. With that being said, solar is still widely accepted in Hawaii and beneficial for most homeowners, but policy changes will need to take effect before installations become more widespread.

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Benefits of Solar Energy in Hawaii

There are many upsides to going solar in Hawaii, from financial incentives to environmental benefits. We’ll discuss the most promising and appealing benefits of solar conversion in Hawaii below.

Electricity Bill Savings

The most significant benefit of converting to solar power in Hawaii is the savings you’ll experience on energy costs. Energy is more expensive in HI than in any other area in the US, so a reduction to the average monthly energy bill — $162.66 throughout the state — is a huge upside. Homeowners who can eliminate their utility bills can save nearly $2,000 every year. That comes out to an average savings of $49,458 over the lifespan of your panels, and that’s after they pay for themselves! Another upside to saving on your electric bill with solar panels is that you’ll be less reliant on your power company, which means you’ll avoid future rate hikes for 25+ years, allowing you to budget and plan more efficiently.

Lower Taxes & Access to Other Incentives

Despite the fact that Hawaii has some less-than-favorable policies in place that limit the value of solar panels, there are still quite a few incentives offered by the state and federal governments that make solar more accessible and affordable. Most notable is the federal solar tax credit (ITC), which is a credit to your federal income taxes in the amount of 26% of your system cost. In Hawaii, the ITC is an average of $3,818. Some other Hawaii solar incentives are included below:

  • Solar and Wind Energy Credit: This is a state income tax credit that provides even more value than the ITC. This credit is for 35% of your entire system cost — up to $5,000 — and it gets credited to your state income tax liability.
  • City of Honolulu Real Property Tax Exemption: This is a property tax exemption that prevents your property taxes from increasing just because you install solar panels. As the name implies, this incentive is only afforded to residents in the City of Honolulu.
  • Green Energy Money Saver (GEMS) Hawaii: The GEMS Hawaii program makes solar installation far more accessible to low-income households.

Home Resale Value Increase

Another massive benefit of installing solar panels in Hawaii is the fact that your property value will go up as a result, provided you buy or finance your home solar system. According to research done by Zillow, the average home in the US experiences a value bump of around 4.1%.3 Given the average home value of $842,487, this means the typical value increase is a massive $34,542!4 The value bump could be even higher in more expensive areas, like Oahu, Maui and Kauai. Some homeowners expect solar panels to help increase home value even if they sign a solar lease or power purchase agreement (PPA). Unfortunately, the value bump only applies if you use a cash purchase or solar loan to pay for your system.

Clean, Renewable Energy

While financial incentives will be most important to many solar customers, some will care more about their impact on the environment. Converting to clean energy will reduce your carbon footprint and the pollution to which you contribute. Additionally, by limiting your usage of fossil fuels and using a renewable energy source instead, you make your home more energy independent and lean less on your electric company.

What to Look Out For When Considering Solar in Hawaii

There are a few things you’ll need to consider even after you decide that solar panels are right for your home. We’ll discuss these important considerations below.

Upfront Cost

Of course, every homeowner will need to consider their upfront cost of going solar. For most Hawaiians, this isn’t a major issue, thanks to the required system size being much smaller than the national average and the tax incentives available from the state and federal governments. You can keep your upfront investment down by choosing less expensive solar panel brands, turning down add-on products like solar batteries or electric vehicle chargers and finding a solar loan that requires little or no money down.

Payback Period

The payback period, which we mentioned above, is a crucial factor to consider even after you decide to install solar panels. You can use your estimated payback period to budget years into the future, justify adding solar batteries or other add-on products to your home solar project and more. Remember, the average payback period in HI is just 6 years. If your estimated time frame for payback is more than 9 years, your total ROI will be lower than average, although your panels will still likely be worth the investment.

Net Metering Policies in Hawaii

Unfortunately, net metering is no longer mandated or available in the State of Hawaii, so homeowners will have a harder time eliminating their electric bills. Given the amount you can save without net metering, it’s not a make-or-break factor, thankfully. However, many homeowners choose to pay more upfront for a solar battery installation, which can make offsetting electric costs much easier, speed up panel repayment and increase the average return on investment. Additionally, the state tax credit and the ITC can make solar batteries far more affordable.

Pending Policies & Changes to Incentives

The solar industry is rapidly evolving and improving, especially in areas like Hawaii, where some of the policies are less than favorable. Incentives and rebate programs can change, disappear or be added without notice, so it’s best to do your research for updates before you commit. We don’t recommend waiting for better incentives to come along, but understanding what benefits are available to you is important before spending thousands on solar PV equipment.

Weather & Climate in Hawaii

States near the equator receive the most direct and intense sunlight, which means southern states are generally better suited for solar panel installation. Hawaii is the closest US state to the equator and receives far more sunlight than most states, making it one of the best geographic areas for solar in the country. Solar panel production in Hawaii will be limited on cloudy days, but there is plenty of sunlight for most residents to benefit from solar. Hawaii doesn’t experience much extreme weather that makes solar less valuable or puts panels at risk of damage. There are occasional intense winds that could damage your equipment, but opting for a solar installer that provides a good physical protection warranty will provide plenty of peace of mind for most homeowners. Overall, weather and climate aren’t much of a concern when it comes to going solar in Hawaii.

Companies Pushing Solar Leases or PPAs

Finally, you need to be careful of disingenuous or unreliable solar companies when converting to solar power. Most of the time, you can assume that companies offering “free solar panels” or “first year free” aren’t a good option. This is typically a marketing scheme to get you to sign a solar lease or power purchase agreement (PPA). Leasing solar panels isn’t recommended, as they don’t bump up your home value, provide far fewer savings than a solar loan and prevent you from taking advantage of the federal tax credit. Especially with the affordability and accessibility of solar loans, solar leases and PPAs should be avoided if possible.

Wrap Up: Is Solar Worth it in Hawaii?

Generally speaking, solar panels are more than worth it in Hawaii and provide most homeowners with massive savings totaling close to $50,000 after the panels pay for themselves. While the abundant sunlight and high energy costs in Hawaii make solar an excellent option for the majority of residents, it’s not ideal for everyone. You’ll need to assess your home to determine if solar conversion is right for you and your budget. Some things you’ll need to consider include your upfront costs of going solar, how much you spend on energy every month, how long it will take to pay your panels off, shading on your property and more. Given how complex the calculations can be, we recommend contacting a reputable solar installer to help you decide if solar is a worthwhile investment for your home.

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Related Topics

Frequently Asked Questions

The EcoWatch team is thrilled to get questions regularly from Hawaii homeowners who are thinking of going solar. Below are some of the questions we see most often, along with our responses.

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Dan Simms

Solar Expert

Dan Simms is an experienced writer with a passion for renewable energy. As a solar and EV advocate, much of his work has focused on the potential of solar power and deregulated energy, but he also writes on related topics, like real estate and economics. In his free time — when he's not checking his own home's solar production — he enjoys outdoor activities like hiking, mountain biking, skiing and rock climbing.