Cost of Solar, Financing, Lease Options
How much does solar energy cost?
An average residential solar system costs between $15,000-$25,000 after solar rebates and solar incentives. Considering that you will probably spend over $72,000 in electrical bills over the next 25 years, this can be a small price to pay. Some companies even offer solar lease options in which you pay no out-of-pocket expenses for the installation.
The exact cost of your solar system will depend on the applicable Hawaii solar rebates and utility incentives available in your area and the type of solar installation you chose. Using a qualified installer who is familiar with the local incentives and permitting process will ensure that you get the most from your investment.
Are there any government tax incentives or rebates?
One of the great elements of solar power in the U.S. is that there are large number of tax incentives and rebate programs that exist to make it easier to afford solar power for your home. The solar installer that you select will be up to date on all of the applicable incentives based on where you live but below are some of the basics:
- Federal Tax Credit: Investment Tax Credit (ITC) allows individuals to deduct 30% of the cost of a solar system from individual federal income taxes;
- Individual State Rebates: Many states offer cash rebates that are either flat amount or are based on the size of your solar power system – check out the U.S. governments Database of State Incentives for Renewables & Efficiency for more information on the rebates in your particular area;
- Property Tax Exemptions: Many states also specifically exclude the value a solar energy system from your your annual property taxes… for example, if a new solar power system adds $30,000 to the value of your home, that $30,000 will be exempted from the total assessed value and your property taxes will not increase as a result of the new system.
- Municipal and Utility Rebates: In addition to the federal and state incentives, many local municipalities and utilities will offer rebates on top of everything else…please check out Database of State Incentives for Renewables & Efficiency for any incentives in your specific area.
What are the current Hawaii solar rebates and solar tax credits and how do they work?
Hawaii has implemented a number of rebates and financial incentives to help promote the adoption of Hawaii solar energy. Depending on whether you are looking for a solar thermal system or a full solar panel system, there will be either a solar rebate, solar tax credit or both for you. For example, there are a number of rebates throughout Hawaii for solar thermal systems (solar waters heaters):
- The Hawaii Energy Efficiency Fund, a public benefit fund, offers residential rebates of $750 for solar water heaters;
- Residents who install a solar water heat system can receive a one-time, $1,000 rebate from the Hawaii Electric Company (HECO) Energy Solutions Program as well as from HELCO and Maui Electric Company (MECO); and
- Through the Kauai Island Utility Cooperative’s Energy Wise Program, Kauai residents may be eligible to receive an $800 rebate when they install a qualifying solar water heating system.
Furthermore, Hawaii has adopted a strong tax credit incentive to help people afford the cost of different types of solar products for their home or business:
- For solar panel systems – a tax credit of 35% of project costs or $5,000 (whichever is less) for single family residences; a tax credit of 35% of project costs or $350 per unit (whichever is less) for multifamily residences; and a tax credit of 35% of project costs or $500,000 per unit (whichever is less) for commercial properties.
- For solar thermal systems – a tax credit of 35% of project costs or $2,250 (whichever is less) for single family residences; a tax credit of 35% of project costs or $350 per unit (whichever is less) for multifamily residences; and a tax credit of 35% of project costs or $250,000 per unit (whichever is less) for commercial properties.
What’s great 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 (if you meet certain criteria). 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.
Does Hawaii have any additional incentives to lower the cost of solar?
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-tariff 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!
Hawaii has also exempted the value of a renewable energy source from a property owner’s property taxes. Unlike other home improvements, you will not have to pay increased property taxes even though the value of your home may increase with the installation of a solar electric system.
Is Hawaii a “net metering” state?
In short, the entire state of Hawaii has a net metering policy. This basically 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 credit up to 100% of their electric use bill at the full retail electricity price that they can use later. Again, making it cheaper to afford solar panels for your home.
If I can not afford an up front payment for a solar power system, are there financing options to help me?
Yes, our partners offer a variety of great solar financing options to help offset some of initial installation costs. In some cases, your monthly payment will be less than the amount of savings on your electric bill. Low interest rates are available and the solar system increases the value of your home. Again, the your solar installer will have all of the details on the available solar financing options but make sure you ask about the following:
- Home Equity Loans: borrowing against the equity of your home;
- Solar Lease: leasing the solar panels for a fee over a set length of time; and
- Power Purchase Agreement: an arrangement similar to a lease arrangement where the solar provider/installer secures funding on their own for the solar project, installs the solar system in your home/office building and then sells the electricity from the solar system to the home/building owner at a fixed contractual price for a set length of time.
**Click here to get a free Hawaii solar assessment from pre-certified installers in your area!**