Getting Started with Solar Energy in Hawai’i

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Take a cruise down most neighborhoods in Hawai’I and one thing that you are likely to see other than palm trees and ocean views are solar photovoltaic panels dotting rooftops of many homes (commercial real estate as well). Hawai’I ranks as the top state in the U.S when measuring solar installations by population with 6,403 solar installations per 100,000 people (2). Solar energy is more than just a trend, it continues to lead the charge as the world attempts to shift towards more renewable sources of energy. Hawai’I, with its abundant sunshine year-round, is a leading state for solar energy.

One big incentive to installing solar projects at your home is the financial savings. Energy costs remain the highest in the nation here in Hawaiʻi due to the cost of importing oil to the Hawaiian islands and as fuel costs rise due to inflation and other global factors, the cost of electricity for Hawai’i homeowners will rise as well. On Oahu, the residential rate of electricity in 2021 was on average 32.47 cents/kilowatt-hour(kWh). In Hawai’I County, the rate was 37.92 cents/kWh and in Maui County it was 34.85 cents/kWh. To put this in perspective, the national rate of electricity in 2021 was just 13.72/kWh (2). The average electric bill runs at $203/month which is the highest in the country which is 89% greater than the national average (3).

Solar energy systems allow you to produce energy for your home from the sun, rather than purchasing it from HELCO or your local energy provider. Solar energy can free you from having to rely on energy purchased from the electric company, which means you are also free from worrying about rising electric costs. Studies show that solar energy systems can reduce your energy bill by 50% (4).

Another driving force behind installing solar in your home is the environmental impact – solar energy is clean energy, or energy derived from a natural and renewable source. Solar Power in Hawaii is a leading force for Hawaii’s Clean Energy Initiative and an important factor in Hawaiʻis goal to become a carbon-free economy by 2045.

If you want to get started with installing a solar photovoltaic or solar water heater system at your home, the first step is to do your research and know what options are available to you. First, determine if leasing the system, owning the system, or a power purchase agreement is right for you.

With leased systems, you will have little upfront costs – however your monthly payments will be higher because you will be renting the equipment from a vendor. Depending on your contract, the vendor will provide maintenance and repairs on your system, and you will be able to use the solar energy produced by the system. However, keep in mind that with a leased system you cannot take advantage of financial incentives like rebates or tax credits. A Power Purchase Agreement is another option and is like a leased system in that a vendor owns the equipment and will install and take care of the solar system once installed, and you will be able to switch to solar energy. The main difference is that with a PPA you are paying a fixed rate for the solar energy and your payments will depend on how much solar energy you use. With a leased system you are paying a fixed rate for the equipment, and you get to use the solar energy produced by the system. The length of the term of a PPA and a solar lease is typically 20 – 25 years. Most companies will allow for transfer of ownership if you sell your home during this term, however it is very important that you ask this question. Also, while most buyers will be okay taking over a lease – there are some buyers that might not be willing to do so.

If you decide to purchase the solar system, while you will have higher upfront equipment and installation costs you will own the system outright and not have to make monthly payments on the equipment. On average the total cost of solar installation can be between $15,000 to $29,000 for average sized systems sized between 4kW and 8kW.2 If you do decide to purchase a new solar system for your home there are different programs available to you through Hawaiian Electric, read more about those here. If you decide to sell your home and have already installed a solar photovoltaic system, be sure to discuss this with your LUVA Realtor, as this green home feature may increase the value of your home. With purchasing the system, you may be eligible for tax credits, rebates, and other financial incentives – below are the current financial incentives for owners of solar energy systems.

Residential Hawai’I Energy Tax Credit – This Tax credit was originally enacted in 1976 and began in Hawai’I in 2009. It allows for a tax credit of 35% of the cost of the equipment and installation of a solar thermal or photovoltaic system. This is a personal tax credit administered by the Hawai’I Department of Taxation. More information can be found here. The credit cannot exceed $5,000 per “5kW” system.

Residential Renewable Energy Tax CreditThis Federal tax credit is administered by the IRS and allows for a tax credit of 26% for systems installed after 12/31/2019 and before 01/01/2023. For systems installed after 12/31/2022 and before 01/01/2024 the tax credit will be decreased to 22%. This tax credit applies to qualifying geothermal heat pumps, small wind turbines, solar energy systems (including solar panels and solar water heaters), fuel cells, and biomass fuel stoves. Existing homes and new construction qualify for this tax credit and both principal residences and second homes qualify.

To get started, we recommend reaching out to multiple solar energy vendors to discuss your needs and to see if their programs offered are a good fit. Below are a few local vendors to reach out to today!

Sunrun (Hawai’I Island, Oahu, Maui, Kauai)
Rising Sun Solar (Hawai’I Island, Oahu, Maui, Kauai)
Provision Solar (Hawai’I Island)
Renewable Energy Services (Hawai’i Island)
Prosolar Hawai’i (Hawai’I Island)
Alternate Energy Hawai’i (Oahu)
HI Power Solar (Oahu)
Haleakala Solar (Maui)
Pacific Energy (Maui)
Solar Kauai (Kauai)