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May 5, 2015 | By RGR Marketing Blog

Is It Time to Go Solar, Hawaii Residents?

If you live in Hawaii, you’ve probably noticed that many of your friends and neighbors are going solar. Why are solar panels becoming such a popular choice in the Aloha State? Hawaii gets plenty of sunshine, and the high rate of conventional electricity in Hawaii makes solar a very attractive and affordable option.

Hawaii Solar Tax Credit

The state of Hawaii offers a state tax credit of up to 35%, but there are several ways this credit can be taken. It can be claimed as a non-refundable credit, which is taken against pre-tax income, or as a refundable rebate.

The refundable rebate allows those who may have homes in Hawaii but spend most of their time working out of state, paying state taxes elsewhere, to reduce the overall credit by 30% and claim it as a tax rebate. That might sound like a raw deal, but for military personnel and snowbirds, it’s actually quite generous.

Tax rebates are available for both PV systems and solar water heating technology, and the credit can be claimed on all expenditures directly related to the solar installation, not just the systems themselves.

Solar thermal water heating credits are capped at $2,250 per system, while photovoltaic arrays enjoy a higher cap of $5,000. Excess credit can be carried forward, so those whose tax liabilities are completely covered by the credit do not need to worry about losing the remainder.

Hawaii Property Tax Exemptions for Solar

Adding solar power to your home increases your property value. That’s great news, but generally speaking, increases in home value mean higher property taxes. However, if you’re installing solar on the island of Honolulu, your new solar installation will be 100% exempt from property tax associated with solar equity gains for a full 25 years.

Hopefully, property tax exemptions will soon be available statewide, but as more than 70% of Hawaii’s residents currently live in Honolulu County, this exemption covers a substantial portion of the state’s population.

Hawaii Net Metering

Hawaii does offer a feed-in tariff, but it’s not particularly suitable for small PV systems, at least for the time being. At the moment, we’d recommend that solar users instead opt for the net metering program, which grants solar users full retail rate credits for every excess kWh of electricity they produce. These credits are deducted from future electricity payments; unfortunately, the credits expire after 12 months. While we’d like to see that change, it’s still a pretty generous state net metering law.

Hawaii Payback Rates for Solar

As it turns out, one of the most attractive incentives in Hawaii comes not from the state, but from the utilities: high electricity rates. They’re not an incentive, strictly speaking, but they do dramatically improve solar’s value proposition. With all that sunshine and electricity rates of nearly $.40 per kWh, it doesn’t take long for solar to pay for itself. For a 5kW solar system break-even point generally comes at about 4 years. Not too shabby!

[Photo Via: BP.blogspot]

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