As of 2023, 17% of Hawaii’s power comes from solar energy. With great sunlight and high electricity rates, Aloha State is inspiring locals to make the switch. In fact, homeowners can discover net savings of nearly $40,000 with solar panels in Hawaii.
While this is definitely enough motivation to consider a solar array, the cost factor may make you hesitate. Fortunately, Hawaii offers plenty of opportunities to save on installation costs. From tax credits to major government regulations, we’ll explore solar benefits in Aloha State.
How to Save Money on Solar Panels in Hawaii: Overview
Right off the bat, homeowners in Aloha State can save money with solar energy. Hawaii has some of the country’s highest electricity rates, making it possible to see huge returns with an array. Additionally, the state is moving forward with a rigorous renewable portfolio standard. Hawaiians could discover discounts and incentives in three types:
- Federal tax returns
- State rebates
- Government regulations
While Hawaii positions itself to support solar energy, the state still has room to grow. Still, with state-level exemptions and tax credits available, homeowners have several opportunities to cut down installation costs. Let’s look into these further.
Federal Incentive for Hawaiians
Whether living in Hawaii or any other place in the United States, you can qualify for the federal solar tax credit. This incentive motivates homeowners to purchase a solar panel array by offering 30% off the installation in the form of credit. In some cases, the federal return can save locals nearly $5,000 or more.
To take advantage of this incentive, you must meet these prerequisites:
- Homeowners must own the equipment (no leases).
- Homeowners must live at the residence in which the equipment is installed.
- Homeowners must purchase original equipment (first-time installation).
The federal incentive lasts until 2035, when the program terminates. So, Hawaiians have plenty of time to make the switch. However, don’t wait too long; as the State continues to improve its solar mandates, and more benefits will follow from municipalities.
Solar Panels in Hawaii: Credits and Rebates
Hawaii is among the few states with a state tax incentive. This is one of the best opportunities for homeowners to cut the cost of an installation, saving 35% (up to $2,250) in the form of a credit on state taxes. Even more, this benefit applies alongside the federal incentive, meaning you can enjoy the full savings of both.
However, the Aloha State hasn’t pushed for municipal engagement. Locals won’t have much luck finding rebates from their local utility companies for the time being. This also goes for net metering standards. Homeowners have little opportunity to connect to the grid, which means there’s hardly any reason to produce excess energy.
Solar Panels in Hawaii: Government Regulations
A major reason Hawaii lacks municipal support is due to its renewable portfolio standards (RPS). The Aloha State actually has one of the leading RPS policies in the country, with an ultimate goal of 100% renewable energy production by 2045. However, because Hawaii continues to meet its objectives, there’s no reason to enact other mandates.
Although municipalities aren’t pressed to encourage solar energy, the state still has a couple of progressive regulations. In addition to the tax credit, homeowners that make the switch in 2023 can receive a property tax exemption for their installation. This means that any value increase due to a solar panel system won’t be taxed. The regulation lasts for 25 years, which aligns with the typical lifespan of a residential array.
Should Hawaiians Lease Solar?
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Usually, it’s not recommended to lease a solar panel system. Not only are the savings marginal, but homeowners can’t take advantage of benefits such as tax credits, net metering, or performance program.
Hawaii is one of the exceptions. Because of the incredibly high rate for electricity, homeowners can see net returns of $100 or more a month after lease payments. This means you can still discover financial benefits without even paying for a system. If you’re low on funds, this is definitely an option worth considering.
Solar Panels in Hawaii: Incentive Summary
| Benefit | Accessibility |
|---|---|
| Federal Tax Incentive | 30% return |
| Hawaii Tax Credits / Rebates | 35% up to $2,250 / none |
| Net Metering | Limited |
| Renewable Portfolio Standard | 100% by 2045 |
| Property Tax Exemption | 100% for 25 years |
| Sales Tax Exemption | None |
| Performance Payment Program | None |
Further Reading
While the Aloha State runs on island time as far as municipal support goes, homeowners can still find great incentives for solar panels. Hawaii has some of the highest electricity rates in the country, and Hawaiians could save thousands annually by making a switch. For more on solar and other emerging technology in Hawaii, read these articles below.
- How to Save Money on Solar Panels in Connecticut – How do Hawaii’s solar incentives compare to one of the most progressive states for renewable energy?
- Owning an EV in Hawaii: Charging Cost, Incentives, and More – With the Aloha State adopting solar energy at a high rate, it is worth considering an electric vehicle as well.
- Aptera Motors: Guide to the Solar Electric Vehicle Manufacturer – With EVs dominating the car industry, this automaker intends to take them to the next level.
The image featured at the top of this post is ©Mana Photo/Shutterstock.com.
