There are a number of reasons solar panels are booming in Hawaii. But one more than any other… sky high energy prices.
For those who have not gone solar yet in Hawaii, time may be running out to get a great deal (more on that in a bit). But, even so, with electricity costs continuing to rise, many Hawaii homeowners can save 5, if not 6 figures, on electric costs by going solar.
Solar Panels Hawaii: A Guide for HI Homeowners
Below, you’ll find information about average solar panel costs in Hawaii, the tax credits and incentives available and why the window to save big on solar may be running out.
How Much Do Solar Panels Cost in Hawaii?
The average “list” price for a solar panel installation in The Aloha State is right around $25,000 for a 5kW system. That’s the average system size for solar in Hawaii.
But once you factor in tax credits, incentives and savings, your actual costs will end up being more in the $12,000 – $15,000 range.
If you’re looking for per Watt numbers, Hawaii homeowners pay between $2.45 to $2.93 a Watt for solar panels after credits and other savings.
But it’s important to think about solar more as an investment than a cost. And, in Hawaii, it takes a homeowner an average of just 4-5 years of savings on electricity to pay for the upfront costs of getting solar panels.
After that, as they say, it’s all gravy. In fact, most estimates show a Hawaii homeowner can save over $100,000 in electricity costs over 20 years by making the switch to solar.
Again, because of Hawaii’s high electricity costs, the amount of savings is much higher here than it is in other parts of the US.
Hawaii Solar Tax Credit
Hawaii used to have some nice rebates to help homeowners with the cost of solar panels. Unfortunately, there are no more rebates available.
However, there is still a tax credit. The Hawaii tax credit is for 35% of the cost of solar installation up to $5,000. This credit is per system per year. The interesting thing here is a PV (photovoltaics) system for the credit is defined as 5kW. So if you get a larger system than that, it would mean you’re getting 2 systems installed and may get an even larger credit.
In addition to the state solar tax credit, there is also a national tax credit that adds to the savings Hawaii homeowners can get on solar.
For 2021/2022, the tax credit stands at 26%. It goes down to 22% in 2023 and then goes away completely after that. There is no maximum cap on this credit like with the state credit.
The federal tax credit is dollar for dollar. That means if you get a tax credit of $3500 and your Federal tax bill is $4000, you will only end up paying $500 come tax time.
Add these two tax credits together and Hawaii homeowners will get a very nice break on the cost of their solar installation!
Hawaii Solar Incentives
In addition to the tax credits, there are other incentives for Hawaii homeowners that help lower the costs for solar.
First the bad news. Hawaii used to have net metering. That’s where the utility company buys back any excess energy your panels produce and you don’t use. This is a really nice incentive, but Hawaii got rid of it back in 2015.
While there is no net metering, in its place Hawaiian Electric (HECO) customers now have two choices.
One is called Customer Self Supply. Basically this option means you have to use all your solar energy to power your home.
The other is called Customer Grid Supply. With this option you all send the energy your solar panels produce to HECO and they’ll pay you for it (less than retail price).
It can be a challenge to figure out which option makes the most sense for you. The best bet is to have a local expert help you figure out which option makes sense for you.
Property Tax Exemption
Another incentive if a property tax exemption for those in Honolulu City and County. With this exemption you’ll be exempt from property taxes on your solar system for 25 years.
If you live outside of Honolulu, however, you have some lobbying to do to get the same benefit!
GEMS Loan Program
This loan program is for low- and moderate-income homeowners. The way it works is you can install solar panels on your home for $0 down. Then you’ll pay for your solar by a charge that’s added to your HECO/MECO or HELCO bill each month. Both solar panels and batteries are eligible for this loan program.
Low Interest Loans In Honolulu
Here’s another one for those of you in Honolulu city and county. It’s a 0% interest loan up to $60,000. You can check the income limits/requirements here.
For this program, repayment is usually over a 10-year period. However, you can you can ask for 20 and your request will be reviewed on a case-by-case basis.
While not as great as net metering, Hawaii does offer the Solar Power Performance Payments program. These are also known as production incentives or PBIs.
This program gives solar owners small cash payments based on their actual usage. The payments are based on the kilowatt-hours (kWh) that your system produces.
You get paid through credits as Solar Renewable Energy Credits (SRECs). How much this credits are worth will change with location as well as supply and demand. They are another good incentive that can help your solar panel system pay for itself faster.
Are Solar Panels Worth It In Hawaii?
We started this article talking about the sky high rates of electricity in Hawaii and it’s time to circle back to that. Hawaii homeowners have the highest electric bills in the country. The average bill is around $165 now which is about 2x the national average.
And rates are rising. Currently the rates are around 33 cents per kWh which is up almost 5 cents in just the last year alone!
While high electric bills stink, the flip side is that it means the savings from solar for Hawaii homeowners are much greater than in most parts of the country.
The amount of time it takes to make back your upfront costs are lower in Hawaii than anywhere else. And estimates show some Hawaiian homeowners could literally save $100,000 or much more over the course of 29 years with solar panels.
So, yes, for many Hawaiians, solar is totally worth it. But is it worth it for you?
Well, that depends on your specific situation. Where you live, how much sunlight your roof gets, what your monthly electric bill is and more.
The only way to know for sure is to get an estimate from a trusted local solar installation company. Actually, you should get quotes from a number of them. Shop around. Compare the estimates to see how much you can save with solar.
And, if it looks like you can save big, choose a reputable solar company that offers you a fair price for your solar panels.
You want to get quotes sooner rather than later. Because things in the solar market may be about to shift and prices look like they’ll be on the rise very soon.
Why NOW Is the Time To Act
It looks like we are now in a bit of a sweet spot for solar. But it may not last much longer for the following reasons…
- Solar panel costs have come down a lot in recent years. However, reports are that due to tariffs on imported solar panels, material shortages and supply chain issues, costs may be going up a lot soon.
- The 26% federal tax rebate is only available until the end 2022 so you could lose out on free money from the government
- Because of increasingly violent weather and power grid problems, there is no short-term solution for the more frequent, prolonged power outages that have impacted many areas of the state
- The longer you hold off, the more you miss out on saving money on your energy bill
What this means is that, if you’re even thinking about solar panels, now is the time to at least get some quotes to how much you could save.
We highly recommend you get at least one of your quotes from the #1 Solar Advisor in the U.S., UnderstandSolar. They have relationships with the largest, most trusted solar installers to provide homeowners with free, accurate, no-obligation solar savings estimates.
To get started, just enter your zip code below and fill out the form on UnderstandSolar’s site to get an accurate savings estimate from a trustworthy local company.
The representative that contacts you won’t bite (we promise!) and, if you’re not ready to go solar or you find another company with a better offer, no worries. But at least you’ll do so know knowing you’ve made an informed decision.
And, by taking this first step now, you may just end up saving yourself a HUGE amount on your electric bills in the years and decades to come. So get a savings estimate now while you can still take advantage of low solar panel costs and free money from the government.