How to Save Money on Solar Panels In Hawaii

scenic view of downtown honolulu from a roof with solar panels

How to Save Money on Solar Panels In Hawaii

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?

father and son playing near a sollar paneled house
Leasing solar has marginal savings and locks out homeowners from tax credits.

©Altrendo Images/Shutterstock.com

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

Federal Tax Incentive30% return
Hawaii Tax Credits / Rebates35% up to $2,250 / none
Net MeteringLimited
Renewable Portfolio Standard100% by 2045
Property Tax Exemption100% for 25 years
Sales Tax ExemptionNone
Performance Payment ProgramNone

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.

Frequently Asked Questions

Do you actually save money going solar in Hawaii?

Hawaiians can save upwards of $40,000 over the lifetime of a solar panel system by offsetting their electricity bill.

How long does it take for solar panels to pay for themselves in Hawaii?

Considering utility savings of $2,210.28 a year, homeowners in the Aloha State can expect to pay off a 6kW solar panel system in 7.2 years.

How much do solar panels cost in Hawaii?

Hawaiians will pay an average of $2.67 per watt for solar energy. This equals about $16,020 for a 6kW system.

Should I buy or lease solar panels in Hawaii?

It depends on your situation. If your motivation for going solar is to generate net positive dividends, consider the cost of leasing versus buying solar. Tax credits and rebates are available to locals who install solar panels on their residences. If your home cannot support solar, or are a renter or want to avoid high upfront installation costs, leasing solar panels makes sense.

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