Hawaii Solar Programs and Incentives: Complete 2025 Guide

The State of Hawaii, with its ambitious goal of achieving 100% clean energy by 2045, remains one of the most progressive and incentive-rich markets for solar energy in the United States. Despite having the highest electricity costs in the nation, the combination of robust state tax credits, a generous federal incentive, and innovative utility programs makes going solar an exceptionally compelling investment for homeowners and businesses in 2025. This comprehensive guide details every major solar incentive, program, and regulation available to residents across the Hawaiian Islands.

The Financial Foundation: Tax Credits and Exemptions

The most significant financial drivers for solar adoption in Hawaii are the federal and state tax credits, which can collectively cover a substantial portion of the total system cost.

1. Federal Residential Clean Energy Credit (ITC)

The Federal Residential Clean Energy Credit, often referred to as the Solar Investment Tax Credit (ITC), is a non-refundable federal tax credit that directly reduces the amount of income tax you owe.

Important Note for 2025: The year 2025 is critical for the federal ITC. Under the provisions of the One Big Beautiful Bill (OBBB), the 30% credit is scheduled to terminate for residential expenditures made or property placed in service after December 31, 2025 [1]. Homeowners must ensure their system is fully installed, operational, and connected to the dwelling—meaning "placed in service"—before the end of the year to secure this incentive.

2. Hawaii Renewable Energy Technologies Income Tax Credit (RETITC)

Hawaii offers one of the most generous state-level solar tax credits in the country, significantly stacking the savings on top of the federal ITC.

The cap of $5,000 per 5kW system means that for a residential system costing $20,000, the maximum credit is reached at a system cost of approximately $14,285 ($5,000 / 0.35). For systems costing more than this, the credit is capped at $5,000. However, the cap is applied per 5kW of system capacity, which can be advantageous for larger homes or properties that install multiple systems.

3. Property Tax Exemptions

While there is no blanket statewide property tax exemption for solar, the City and County of Honolulu provides a significant incentive.

• City and County of Honolulu Real Property Tax Exemption: This program offers a 100% exemption from real property taxes on the value added by the installation of alternative energy improvements, including solar PV and solar water heating systems [2]. Furthermore, it provides an 80% exemption for any land on which the renewable energy property is installed. This exemption helps ensure that the increased value of your home due to a solar installation does not lead to a higher property tax bill.
• Other Counties: Residents in Maui, Kauai, and Hawaii County should check with their respective county tax offices, as property tax incentives can vary significantly by jurisdiction.

4. Sales Tax Exemption (General Excise Tax - GET)

Hawaii does not have a traditional sales tax; instead, it imposes a General Excise Tax (GET), which is levied on business activities. There is no specific statewide exemption from the GET for the purchase or installation of solar energy equipment. This means the GET (which is 4% statewide, with an additional 0.5% county surcharge in some areas like Oahu) is typically applied to the cost of the solar system. The state and federal tax credits, however, far outweigh the cost of the GET.

Utility Programs: The End of Net Metering and the Rise of SRE

Hawaii was one of the first states to end traditional Net Energy Metering (NEM) due to the high penetration of rooftop solar, which created grid management challenges. Today, Hawaiian Electric (HECO) manages solar exports through a suite of programs collectively known as the Smart Renewable Energy (SRE) Programs.

Smart Renewable Energy (SRE) Export Program

The SRE Export program is the successor to previous programs like Customer Grid-Supply (CGS) and Smart Export. It is designed for customers who want to install a solar PV system and export excess energy back to the grid.

• Mechanism: Instead of one-to-one retail rate credit (like traditional NEM), the SRE Export program compensates customers with export bill credits based on Time-of-Use (TOU) rates [3]. These rates are highest during the evening peak demand hours and lowest during the day.
• Compensation Rates (2024-2026): The export rates are updated every three years and vary significantly by island and time period. The following table illustrates the rates for the current period:

• Credit Expiration: Export credits earned under the SRE Export program expire annually and are "trued-up" to the benefit of all customers. This makes battery storage essential for maximizing the value of your solar production by storing daytime energy for use during the high-rate evening peak.

Smart Renewable Energy (SRE) Non-Export Program

This program is designed for customers who install a solar PV system but do not wish to export any power to the utility grid. It is typically paired with a battery storage system that ensures all excess solar energy is stored for later use, making the home entirely self-sufficient from the grid during peak production hours. This option is ideal for customers who prioritize energy independence and want to avoid the complexities of the export program.

The Battery Revolution: Storage Incentives

Recognizing the need for energy storage to stabilize the grid and maximize the value of solar, Hawaiian Electric offers one of the most aggressive battery incentive programs in the nation.

Bring Your Own Device Plus (BYOD Plus)

The BYOD Plus program is a successor to the popular Battery Bonus program and is designed to incentivize customers to install new energy storage systems (ESS) and make a portion of that capacity available to the utility for grid services during high-demand periods.

• Upfront Incentive: The program offers a substantial upfront cash incentive of $400 per kW committed to the program, with no maximum cap [4]. This incentive is paid after the contract is executed and the system is installed.
• Low-Moderate Income (LMI) Adder: To promote energy equity, an additional $400 per kW committed is available for low-to-moderate income households, bringing the total upfront incentive to $800 per kW committed for eligible customers.
• Non-Expiring Credits: A key benefit of BYOD Plus is that the export credits earned from the battery's participation in the program do not expire, unlike the standard SRE Export credits. This provides a long-term financial benefit for participating customers.
• Mechanism: Customers agree to make their battery available for dispatch by HECO during certain times. The battery primarily serves the customer's household first, and any remaining excess is used for grid support.

Community Solar and Energy Equity Programs

Hawaii is actively developing its Community-Based Renewable Energy (CBRE) program, often referred to as community solar, to ensure that all residents, including renters, apartment dwellers, and those with unsuitable rooftops, can benefit from solar energy.

Community-Based Renewable Energy (CBRE) Program

The CBRE program allows customers to subscribe to a portion of a larger, remote solar project and receive credits on their monthly electric bill for the energy produced by their share of the project.

• Target Audience: Renters, condo owners, and homeowners whose properties are not suitable for rooftop solar.
• Status: The program has faced regulatory and implementation delays but is actively moving forward with multiple projects in the queue across the islands [5]. The goal is to provide bill credits and savings to subscribers without requiring any physical installation on their property.
• Low-Income Focus: A significant portion of the CBRE program capacity is often reserved for low-to-moderate income subscribers to ensure equitable access to clean energy savings.

Low-Income Solar Programs

Beyond the LMI Adder in the BYOD Plus program, various non-profit organizations and state initiatives focus on providing direct assistance to low-income households:

• Weatherization Assistance Program (WAP): While not exclusively solar, this federal program, administered by the state, can cover the cost of energy-efficiency improvements, which can complement a solar installation.
• Hawaii Energy Rebates: Hawaii Energy, a ratepayer-funded program, offers various rebates for energy-efficient appliances and solar water heater tune-ups, which can indirectly reduce the required size of a solar PV system.

Solar Rights, Permitting, and Regulations

Hawaii has some of the strongest solar access laws in the nation, protecting a homeowner's right to install a solar energy system.

Solar Rights and Homeowners Associations (HOA)

Hawaii Revised Statutes (HRS) Title 12, Chapter 196, Section 7, provides robust protection for solar installations.

"Any provision in any lease, instrument, or agreement that prohibits or unreasonably restricts the installation or use of a solar energy device is void and unenforceable." [6]

This statute effectively prohibits Homeowners Associations (HOAs) and restrictive covenants from banning solar installations. While an HOA may impose reasonable restrictions concerning the placement, screening, or aesthetics of a system, these restrictions cannot significantly increase the cost or decrease the efficiency of the system. Any dispute over "unreasonable restriction" can be challenged under this state law.

Permitting and Interconnection

• Permitting: A building permit is required for all solar PV installations in Hawaii. The permitting process is managed by the respective county building departments (Honolulu, Maui, Kauai, and Hawaii County). The process can vary in duration, but most counties have streamlined procedures for standard residential solar projects.
• Interconnection: The process of connecting your solar system to the Hawaiian Electric grid is managed through the utility's Customer Interconnection Tool. This is a mandatory step for all SRE Export and Non-Export customers. The utility reviews the application to ensure the system meets safety and grid stability requirements.

Solar Financing Options

Hawaii's high electricity rates and strong incentives make solar financing highly attractive. In addition to standard bank loans, the state offers specialized green financing options.

Green Energy Money $aver (GEM$) On-Bill Program

The GEM$ program, managed by the Hawaiʻi Green Infrastructure Authority (HGIA), is an innovative financing mechanism that allows homeowners and renters to finance clean energy improvements, including solar PV and energy storage.

• Mechanism: The loan repayment is collected through a charge on the customer's monthly electric bill (on-bill financing). This simplifies repayment and ensures a high repayment rate.
• Eligibility: The program is designed to be accessible, often requiring no upfront payment and offering competitive interest rates. It is particularly beneficial for low-to-moderate income customers who may face barriers to traditional financing.

Private Clean Energy Loans

Many local financial institutions, including credit unions and banks, offer specialized "Clean Energy Loans" or "PV Loans" with favorable terms, such as:

• Promotional 0% APR Periods: Some institutions offer 0% interest and zero monthly payments for the first 12 to 18 months, followed by a fixed, competitive rate for the remainder of the term.
• Loan Amounts: Loans typically range from $1,500 to $70,000, covering the full cost of a residential solar and storage system.

Solar Renewable Energy Credits (SRECs)

Hawaii does not have a formal Solar Renewable Energy Credit (SREC) market. SRECs are tradable commodities that represent the environmental benefits of solar generation, typically used by utilities to meet state Renewable Portfolio Standards (RPS). In Hawaii, the state's 100% RPS goal is primarily met through utility-scale projects and the various customer-sited programs managed by HECO, rather than a separate SREC market. Therefore, homeowners cannot earn and sell SRECs in Hawaii.

Maximizing Your Solar Investment in 2025

To ensure you maximize the financial benefits of going solar in Hawaii, follow these key strategies:

1. Prioritize Battery Storage: Given the end of traditional NEM and the annual expiration of standard SRE Export credits, installing a battery is crucial. It allows you to store cheap daytime solar energy and use it during the expensive 5 p.m. to 9 p.m. peak period (up to 32.9 cents/kWh on Oahu), dramatically increasing your savings.
2. Apply for BYOD Plus: The upfront cash incentive of $400 to $800 per kW committed from the BYOD Plus program can significantly reduce your out-of-pocket costs immediately.
3. Act Before the Federal ITC Deadline: The 30% federal tax credit is scheduled to expire at the end of 2025. Start the process early to ensure your system is "placed in service" before the December 31st deadline.
4. Leverage the State Tax Credit: The $5,000 state tax credit, combined with the federal credit, can cover over 50% of a typical system's cost. Ensure your installer provides the necessary documentation for Form N-342.
5. Check County-Specific Incentives: Always confirm local property tax exemptions with your specific county (Honolulu, Maui, Kauai, or Hawaii County) to ensure you are not missing out on local savings.

Key Contacts and Resources

For the most accurate and up-to-date information on solar programs, contact the following state and utility resources:

Conclusion

Hawaii's solar landscape in 2025 is defined by high electricity costs and a powerful array of incentives designed to accelerate the state's clean energy transition. The combination of the 30% Federal ITC (expiring soon), the $5,000 State RETITC, and the innovative, cash-incentivized BYOD Plus battery program creates a financial environment where solar and storage are not just environmentally responsible choices, but overwhelmingly smart economic decisions. By understanding and strategically utilizing these programs, Hawaii residents can achieve significant energy independence and realize a rapid return on their investment.

---

References

[1] IRS. (2025). FAQs for modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, AND 179D under Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill (OBBB). [2] DSIRE. (2024). Real Property Tax Exemption for Renewable Energy Technology (City and County of Honolulu). https://programs.dsireusa.org/system/program/detail/3684 [3] Hawaiian Electric. (2025). Smart Renewable Energy Export. https://www.hawaiianelectric.com/products-and-services/smart-renewable-energy-programs/smart-renewable-energy-export [4] Hawaiian Electric. (2025). Bring Your Own Device Plus. https://www.hawaiianelectric.com/products-and-services/customer-incentive-programs/bring-your-own-device-plus [5] Civil Beat. (2025). Community Solar Farms Meant To Save Money Fail To Gain Traction In Hawaii. https://www.civilbeat.org/2025/06/community-solar-farms-to-save-money-fail-to-gain-traction-in-hawaii/ [6] Hawaii Revised Statutes. (n.d.). Title 12, Chapter 196, Section 7: Solar energy device; prohibition. https://programs.dsireusa.org/system/program/detail/343/hawaii-solar-installation-rights [7] Hawaiʻi Green Infrastructure Authority. (2025). GEM$ On-Bill Program. https://gems.hawaii.gov/gems-on-bill/ [8] Hawaiʻi State Energy Office. (2025). State of Hawaiʻi and Federal Incentives. https://energy.hawaii.gov/state-of-hawaii-and-federal-incentives/ [9] Hawaii Department of Taxation. (2024). Form N-342, 2024, Renewable Energy Technologies Income Tax Credit. https://files.hawaii.gov/tax/forms/2024/n342_i.pdf [10] RevoluSun. (2025). Tax Incentives - Solar Tax Credit Hawaii. https://www.revolusun.com/tax-incentives/