Solar Incentives in Hawaii

Hawaii's RETITC is one of the most generous state-level solar tax credits in the United States. Residential taxpayers may claim 35% of the cost of a qualified solar PV system, up to $5,000 per single-family residence. Multi-family and commercial properties have higher caps. The credit is claimed on Hawaii Form N-342 with the annual income tax return. The credit is non-refundable: it reduces tax liability but does not generate a refund beyond what was withheld. Unused credit carries forward to subsequent tax years until exhausted. The credit applies whether the federal ITC is claimed or not — it is independent of federal law, so the federal Section 25D expiration on 2026-01-01 does not affect Hawaii RETITC. Battery storage paired with a qualifying solar system is generally eligible. The credit cannot be claimed on a third-party-owned (TPO) system; only the owner of the system claims it.

Hawaii closed traditional 1:1 net metering to new applicants in 2015. New residential solar customers must elect one of: Customer Self-Supply (CSS), where exported energy is not compensated and the system is sized for self-consumption only (battery storage strongly recommended); Smart Export, where exports during designated time windows are credited at sub-retail rates (~$0.10–$0.14/kWh varying by island and time-of-day); or Customer Grid-Supply Plus (CGS+), a discontinued program for legacy applicants. The economic implication: storage is essentially mandatory for new Hawaii installations. Existing NEM customers (pre-2015) retain grandfathered net metering. The high retail electricity rate ($0.42/kWh average across HECO, MECO, HELCO) means storage payback is fast even without export compensation — typical battery payback in Hawaii is 5–7 years vs 9–12 in mainland markets.

Hawaiian Electric's Battery Bonus is a utility-sponsored cash rebate for residential customers on Oahu who add a qualifying battery to their solar PV system. The battery must commit to dispatchable load reduction during designated peak hours (typically 5–9 PM). The $850/kW rate (capped at 5 kW = $4,250) is paid as an upfront rebate. Participating batteries must be on the HECO Approved Battery List (Tesla Powerwall, Enphase IQ Battery, FranklinWH, BYD Battery-Box, sonnenCore, LG RESU). The program has had multiple budget cohorts; check current availability before signing. Program terms include a 10-year participation commitment with grid-services dispatch on demand, typically 1–4 hours per event, ~30 events per year. Battery Bonus stacks with the Hawaii RETITC and federal Section 48E (commercial leased), but cannot stack with Hawaii's earlier Energy Storage Pilot Program.

Honolulu County (Oahu) provides a property tax exemption for the assessed value of solar PV and other renewable systems on real property. The exemption is claimed via the Honolulu City and County Real Property Assessment Division using Form REA-1 (Renewable Energy System Property Tax Exemption Claim). Maui, Hawai'i (Big Island), and Kaua'i counties operate similar exemptions with slightly different forms — confirm with the relevant county Real Property Tax office. The exemption is permanent (lifetime of the system) once granted, and transfers to the next owner upon property sale. The base property's land and structure assessment continues normally; only the value added by the renewable system is exempted.