Hawaii has a 35% state tax credit for wind and solar energy systems. Honolulu provides its residents who are solar owners with a property tax exemption.
The state has no solar rebates as of 2023. However, Hawaiian Electric has a rebate program for battery systems that gets added to new or existing solar arrays.
Renewable Energy Technologies Income Tax Credit
Incentive Value: 35% of solar PV installation costs, up to $5,000
Frequency: Single-use
The Renewable Energy Technologies Income Tax Credit (RETITC) is the primary incentive for Hawaii taxpayers who own solar panels. The federal government introduced this benefit in 2009, and it covers solar and wind energy systems that have up to 5,000 kW of capacity. Solar water heating and photovoltaic systems qualify for a 35% income tax credit, while wind turbines qualify for a 20% tax credit.
Solar photovoltaic systems used in single-family homes receive a maximum tax credit of $5,000, which homeowners can combine with the 30% federal tax credit. For example, a 6-kW solar PV system with a price of $16,740 would get:
- A federal tax credit of $5,022
- A Hawaii state tax credit of $5,000
In this example, the total tax incentive is $10,022 and the net cost of the PV system reduces to $6,718. Multi-family properties also qualify for the Hawaii solar tax credit, but in this case, the maximum incentive is $350 per dwelling.
You can claim the RETITC by submitting the N-342 Forms, which you can download from the Hawaii Department of Taxation website.
Real Property Tax Exemption for Alternative Energy Improvements
Incentive Value: Equivalent to the Honolulu property tax rate of 0.35%
Frequency: Annual tax exemption for a duration of 25 years
Honolulu has a property tax exemption for several types of alternative energy systems. If you install solar panels, you are not taxed for the increase in property value for the following 25 years.
As a quick example, assume you own a home in Honolulu with an assessed value of $600,000. The local property tax rate is $3.5 for every $1,000 of assessed value, which means you pay $2,100 per year.
- If the value of your home increases to $630,000 after installing a solar PV system, your property taxes stay the same.
- Without the exemption, the $30,000 increase in home value would raise property taxes by $105.
The Honolulu property tax exemption was introduced by the city and county. In other parts of Hawaii, the government taxes you normally for the increase in home value after going solar. But most Hawaii residents have access to this benefit: 70% of the state’s population lives in Honolulu.
Hawaiian Electric Battery Bonus Program
Incentive Value: $850 per kilowatt upfront, $5 per kilowatt per month for 10 years
Frequency: Single-use and continuous
Hawaiian Electric (HECO) provides electricity to 95% of the state, and it is working to increase the distributed storage capacity connected to its grid. If you add energy storage to a new or existing solar system, the HECO Battery Bonus Program offers a cash incentive of $850 per kilowatt. You also get a monthly incentive of $5/kW for 10 years.
- For example, if you install a battery system with a rated power output of 5 kW, you can get an upfront rebate of $4,250 and ongoing payments of $25 per month.
- To get the incentive, you must commit to using battery capacity during a two-hour period between 6:00 p.m. and 8:30 p.m.
You can participate in the program without committing 100% of your solar battery capacity. For example, you can install a 10-kW battery and commit 5 kW to the program. In this case, you’re free to use the other 5 kW. However, you only get incentives for the storage capacity that participates in the program.
The HECO solar battery program is available in the islands of Oahu and Maui, which means most of the Hawaiian population has access. The program ends when the cumulative storage capacity reaches 40 megawatts in Oahu and 15 megawatts in Maui.
Green Energy Money Saver (GEMS) On-Bill Program
Incentive Value: Solar loans with a 5.5% interest rate and a term of up to 20 years
Frequency: Single-use
The Green Energy Money Saver (GEMS) program offers low-interest loans for homeowners and renters who are HECO customers. Borrowers can use GEMS loans for solar energy systems and several types of energy efficiency measures. Loans have a fixed interest rate of 5.5% and a repayment period of up to 20 years.
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