Hawaii Riding High On Solar Power
What’s truly remarkable about Hawaii’s solar tax credit system is that it may be used in conjunction with the federal renewable tax credit (which not all states allow) which can further reduce a potential consumer’s tax liability thereby making solar more affordable. And recently, Hawaii amended its tax credit incentive program providing the option for Hawaiian taxpayers to claim a refund, instead of a tax credit for the purchase of a solar water heater or solar panel system. When Hawaiian consumers were only allowed to make these solar purchases using a tax credit as an incentive, some taxpayers were not able to take advantage of the financial incentive if they had no tax liabilities. So, those consumers on a fixed income or those consumers that did not owe taxes were precluded from taking advantage of the tax credit. With a refundable tax credit, more consumers may be able to purchase and install these renewable energy systems which will reduce their monthly utility bills and reduce Hawaii’s dependence on imported fossil fuels.
Hawaii’s government has even gone so far as to exempt the value of a renewable energy source from a property owner’s property taxes. Specifically, the alternative energy source (ie. solar power, solar hot water, wind power, hydropower, etc.) installed on a building, property, or land is exempt from property taxes for 25 years. This means home owners will not be hit with a higher property tax bill for making the switch to renewable energy. Energy sources based on fossil fuels, nuclear fuels or geothermal energy are not eligible for this exemption.
Hawaii is also one of the few states in the U.S. that has adopted a feed-in-tariff system for solar energy. A feed-in-tarrif is essentially where your utility company has to pay you cash for the amount of energy your system produces above the amount you consume. Currently in Hawaii, participating utility companies (HECO, MECO and HELCO) are paying $0.218/kWh for solar panel systems that are less than or equal to 20 kW; and $0.189/kWh for solar panel systems that are greater than 20 kW and less than or equal to 500 kW. Hawaii has not set rates for systems that are greater than 500 kW just yet. Assuming that the average U.S. home uses approximately 8,900 kWH per year, a solar equipped homeowner could be looking at payments from their utility between $1,680 and $1,940 each year!
On top of the feed-in-tariff, the entire state of Hawaii has a net metering policy which means that you only pay for the net amount of electricity that you use. With net metering, homeowners with solar installed are able to “bank” the excess electricity their solar system generates and receive credits up to 100% of their electric use bill at the full retail electricity price that they can use later.
As you can see, solar power in Hawaii is a booming industry and is only going to get bigger due to tremendous government assistance. From rebates to tax credits/refunds and feed-in-tarrifs, Hawaii is quickly becoming the model state for supporting solar power. For more information about Hawaii’s renewable energy initiatives or solar power and energy efficiency in general, please visit the Hawaii Clean Energy Initiative, Hawaii Public Utilities Commission, U.S Department of Energy, or MyEnergySolution.
Photo Credit: ShellVacationsHospitality via flickr under a CC license
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