Various incentives can substantially reduce the cost of purchasing a solar system. These are discussed in detail in the ‘solar water heating’ and ‘solar electricity (PV)’ sections of this website. This page provides only a brief description of each incentive.

$1,000 Rebate (Solar Water Heating Only). As part of the Energy $olutions programs, Hawaiian Electric Company (HECO) and its subsidiaries, Maui Electric Company (MECO) and Hawaii Electric Light Company (HELCO), provide one-time $1,000 rebates to qualifying customers who install solar water heaters using approved contractors. The program, which began in June 1996, has supported the installation of more than 30,000 home solar water heaters in Hawaii. 

State Tax Credit (35%). Hawaii Energy Tax Credits allow individuals to claim an income tax credit of 35% of the cost of equipment and installation of a solar thermal or photovoltaic system. A credit that exceeds the taxpayer's income tax liability to be carried forward to subsequent years until exhausted. Credits are capped based on property and system type as follows:

• Single family/hot water: credit is capped at $2,250.
• Single family/PV: credit is capped at $5,000.
• Multifamily: credits for multi-family PV and hot water systems are capped at $350

Federal Tax Credit (30%). The Energy Policy Act of 2005 (H.R. 6, Sec. 1335) established a 30 percent tax credit up to $2,000 for the purchase and installation of residential solar electric and solar water heating systems. An individual can take both a 30 credit up to the $2,000 cap for a photovoltaics system and a 30 percent credit up to a separate $2,000 cap for a solar water heating system. The credit is scheduled to expire at the end of 2008. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. To be eligible for the credit, a system must be "placed in service" or activated on or after January 1, 2006, and on or before December 31, 2008. 

Net metering. Net metering refers to the ability of power producers, called customer-generators, to receive credit at the full retail rate for excess power that they send into the utility grid.  When this happens the utility meter spins backwards.  Net metering is particularly useful for solar because it allows power produced during the day to be consumed at night when the system is not producing power. The customer-generator benefits by using the utility grid as its ‘battery,’ while the utility avoids the cost of producing and distributing power to its other customers located near the customer generator.  Although it is a win-win situation, not all systems qualify for net metering. The current size limit on net metered systems for HECO, MECO, and HELCO is 100 kW per meter. For KIUC it is 50 kW. Further, electric utilities are only required to offer net metering until total net metered capacity is equal to 1.0 percent of peak demand, half of which is reserved for systems under 10 kW and half for systems between 11 and 100 kW (11 to 50 kW on Kauai).

Key Provisions

• Requires net metering agreement with public utility
• Excess carried over monthly and settled annually
• Available for solar, wind, hydroelectric, and biomass projects
• Utility provides new meter free of charge