With the help of generous tax incentives that pay for 90 percent of a project’s cost, solar can dramatically reduce operating costs for Hawaii’s businesses, while helping them tap into environmental branding and marketing opportunities. Our state’s electric rates are by far the nation’s highest and have been rising rapidly. In part this is because they are tied directly to the price of oil through the ‘energy adjustment charge’ portion of the utility bill, which automatically passes increases in input costs for grid power on to the customer. Because nearly 80 percent of Hawaii’s grid power is produced by burning petroleum, expensive oil means expensive electricity. Solar power lets Hawaii businesses get a grip on operating costs and lock in power expenses at affordable levels.

For 2008, federal and state tax incentives repay businesses a starting 86.9 percent of the project’s installed cost in the first year – before factoring in electricity savings. This results from the combined effects of a 30 percent federal tax credit, a 35 percent state tax credit, and the ability to deduct 60 percent of the project’s depreciable basis under an accelerated depreciation schedule.  This 86.9 percent rate overstates things bit - because federal taxes must be paid (in Year 2) on state tax credits taken in Year 1 – but even making this adjustment makes the net share of projects costs offset by Year 1 state and federal tax incentives 74.7 percent.

Obviously, businesses using solar power also benefit by not paying some or all of their power bill.  At Hawaii’s utility rates, these savings are substantial. In a world of uncertainty about the future of oil and hence the future price of Hawaii’s grid power, solar offers businesses the opportunity to de-link their energy costs from global energy price trends, which are tied to a variety of factors that have no inherent link to the Hawaii business environment. The value of this hedge against global energy prices is one of the most important benefits of solar power. Direct power savings add to the project's immediate return.

In addition to cost savings, solar power offers green branding opportunities.  Current cultural attitudes favor greener, lower-impact lifestyles and consumers are looking to business to take the lead.  A recent Yale University study found that 83 percent of Americans consider global warming a “serious” problem.  Fully 96 percent of the study’s respondents also said that dependence on Mid East oil is a “serious problem.” The director of the study concludes that “the US in the midst of a revolution” and that a public “frustrated with the limits of government action increasingly wants business to solve environmental problems.” Customers using Suntech Hawaii’s solar energy solutions can market their environmental credentials directly to a public that is eager for environmental leadership and change.

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