Last updated: December2024
Written by
Catherine Lane
Hawaii homeowners can save $9,500 on average with solar incentives and rebates, reducing the cost of a solar installation by almost 63%! These savings don’t include how much solar panels can reduce your electricity bill in Hawaii, which can be significant considering it has the highest electric rates out of any state.
Solar can be a fantastic investment in the Aloha State, but because of the state's unique infrastructure, there are a few regulations that you need to keep in mind. We explain what you need to know about Hawaii’s solar incentives and rebates, including what’s available, how to apply, and how long they’ll be around.
Incentive | Estimated average annual savings | Eligibility | About |
|---|---|---|---|
Federal solar tax credit | $4,590 | All tax-paying U.S. citizens | 30% tax credit applied to federal income taxes |
Renewable Energy Technologies Income Tax Credit | $5,000 | All tax-paying Hawaii citizens | 35% tax credit applied to state income taxes, capped at $5,000 |
Green Energy Money Saver Program (GEMS) | Savings vary | Low and middle-income homeowners and renters | Provides 20-year solar loans with 5.5% APR with no credit check |
Honolulu Solar Property Tax Exemption | $125, varies with property and system value | City of Honolulu property owners | 100% property tax exemption of renewable energy upgrades for 25 years |
Quick Facts
Value: 30% of solar installation costs
Frequency: One-time tax credit, rollover for five years
How to apply: File IRS Form 5695 with annual tax return
Hawaii homeowners can use the 30% federal solar tax credit when they go solar. The credit is equal to 30% of the costs of a solar installation and is applied to federal income tax liability.
The average solar system in Hawaii will earn a federal solar tax credit of $4,590. Remember that you don’t get this as a lump sum payment. The federal tax credit reduces your income tax liability, and you won’t see the benefits of the tax credit until you file your taxes for the year.
If your liability is less than the value of the federal solar investment tax credit, it will be reduced to $0, and the remaining credit value will be applied to next year’s taxes. The credit can roll over for five years without an income limit.
Quick Facts
Value: 35% of solar installation costs, up to $5,000
Frequency: One-time tax credit
How to apply: Hawaii Department of Taxation form N-342 with state income tax return
Hawaii’s Renewable Energy Technologies Income Tax Credit (RETITC) provides homeowners who install renewable energy systems, like solar panels, with a tax credit equal to 35% of installation costs up to $5,000.
Based on the average cost and size of solar installations in Hawaii, most homeowners will earn the full $5,000 cap.
The Hawaii solar tax credit will reduce the value of your state income tax liability. Like the federal tax credit, Hawaii’s state solar tax credit will not reduce the upfront cost of your solar installation direction. Instead, you’ll see the savings on your taxes for the year you installed the clean energy system.
Quick Facts
Value: 20-year solar loan, 5.5% APR
Frequency: One-time financing
How to apply: Hawaii Green Infrastructure Authority website or mail-in application
The Green Energy Money Saver Program is designed to help low- and middle-income Hawaii residents go solar.
The GEMS program provides homeowners a 5.5% APR, a 20-year solar loan that is repaid through their electric bill. The financing rates for GEMS loans tend to be lower than those of conventional solar loans, and the GEMS program does not require a credit check.
The monthly projected utility bill must be at least 10% lower than your current pre-solar bill. The Hawaii Green Infrastructure Authority runs the program, not your utility company.
To qualify for GEMS, you must:
Be a customer of Hawaiian Electric, Maui Electric, or Hawaiian Electric Light Company
Have an income below 140% of the area’s median income (AMI)
Have a minimum of six months of history with the utility company and have an account in good standing
Quick Facts
Value: 100% property tax exemption
Frequency: Annual exemption for 25 years
How to apply: File City of Honolulu Real Property Assessment Division form E-8-10.12 on or before September 30 of the proceeding year for which exemption is claimed
Honoulu’s Real Property Exemption for Alternative Energy Improvements exempts solar panel installations from property taxes for 25 years. Only residents of the City of Honolulu qualify.
A recent study by SolarReviews found that solar can increase your home’s resale value by 6.8%, on average. Based on Honolulu's average home value and property tax rate, the Alternative Energy Improvement property tax exemption can save taxpayers $125 per year on their property taxes when they install a solar photovoltaic system.
Quick facts:
Electric rates average $0.42 per kWh in Hawaii.
Hawaii does not have full retail net metering.
The grid-supply billing plan credits excess solar energy exports between $0.15 and $0.28 per kWh, depending on where you live.
The self-supply billing does not allow for energy exports.
Hawaii solar owners can choose between two solar utility billing plans:
Grid-supply: Solar panels first supply energy to the home. Any excess energy is sent to the grid and valued at a rate lower than the electricity rate. In Hawaii, grid-supply utility billing plans give credits between $0.15 and $0.28 per kWh, depending on where you live.
Self-supply: A solar energy system is designed only to cover a home's energy usage and cannot send electricity to the grid. Limited amounts of excess power for short periods can be sent to the grid, but the customer will not be compensated for this energy.
Although these plans provide lower savings than a true net metering plan, where excess solar energy is credited at the full retail electric rate, Hawaii solar owners can still see significant savings because of the state’s high electric prices.
How to apply for solar buyback plans and your solar savings will vary depending on your utility company. Visit your utility website for more information on options for solar homeowners.
Solar batteries are a popular choice for homeowners in Hawaii because of the self-supply solar billing plan and because they provide access to backup power when the grid is down. According to the Berkeley Lab, Hawaii has the highest residential battery storage attachment rate of any state.
Although they can provide some extra electricity bill savings in Hawaii, solar batteries have a high upfront cost. Battery rebates and incentives can make energy storage installations more affordable. Here are solar battery incentive options in Hawaii:
Federal solar tax credit: Energy storage installations are eligible for the 30% federal tax credit, which helps with total costs.
HECO Battery Bonus Program: The Battery Bonus Program provided an upfront rebate of $850 per kW of battery output and continuing monthly capacity payments. As of July 2024, the program is closed to new applicants.
Rooftop solar panels in Hawaii cost about $3.00 per watt installed, bringing the average cost to install a 5.1 kW solar installation in Hawaii to $15,300 before incentives. Once you consider the federal and state solar tax credits, the cost of home solar in Hawaii falls to just $5,700.
State tax credit: $15,300 x 35% = $5,333 (capped at $5,000)
Federal tax credit: $15,300 x 30% = $4,590
Total savings: $5,000 + $4,590 = $9,590
Effective system cost: $15,300 - $9,590 = $5,710
If you pair your solar PV system with a solar battery, the total cost of the system will be closer to $28,000. Solar battery installations still qualify for the federal tax credit, so a solar-plus-storage system in Hawaii after incentives would cost $14,810.
The cost of a solar panel installation will depend on a few factors, like how many solar panels you install, the installer used, and the characteristics of your roof.
How do solar incentives and rebates impact each other? The solar incentives available in Hawaii will not affect one another. The federal solar tax credit and the Hawaii tax credit are both based on the system's total cost before any other rebates are applied. However, tax credits may change the taxable income you report. Consult with a tax professional to learn about the effect of tax credits.
Hawaii offers excellent solar incentives to homeowners, and it has extremely high energy bills, making it one of the best places to invest in solar panels. Through bill savings, it can take as little as 4.5 years to pay back your solar investment.
But every home is different, and your financial situation is unique. The best way to determine if solar is right for you is to speak with local solar companies. Solar installers in your area can help you design a solar power system that covers your energy needs and guides you through the solar incentive application process.
We recommend getting at least three quotes from reputable solar installers to maximize your solar savings and get the best deal on solar panels in Hawaii. SolarReviews can connect you with pre-vetted solar installers in Hawaii, or you can research our expansive directory of solar companies in Hawaii to find the best company for you.
Catherine has been researching and reporting on the solar industry for five years and is the Written Content Manager at SolarReviews. She leads a dynamic team in producing informative and engaging content on residential solar to help homeowners make informed decisions about investing in solar panels.
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