Save Hawaiʻi’s Solar Tax Credit, Save Our Solar Industry
There is no doubt that amidst the COVID-19 pandemic, Hawaiʻi's leaders will need to make difficult decisions to address Hawaiʻi's current and projected budget shortfalls. While COVID-19 relief and response funding remains the top priority, Hawaiʻi's leaders should also be working to save as many jobs as possible while supporting a more sustainable, equitable economic future in the long term. You can see which budget and environmental bills Sierra Club believes should be prioritized when legislative session reconvenes on our CapitolWatch page.
One of the sustainable, long-term actions we are advocating for is preserving Hawaiʻi's solar tax credit. The current solar tax credit not only makes installing solar systems on homes and local business affordable, it also lowers everyone's electricity bills, supports thousands local solar jobs in our communities, and provides tax revenue to the state.
While Hawaiʻi's tourism-based economy is struggling, our leaders should look at diversified industries that can be preserved and expanded to fill unemployment gaps. The solar industry is just that—70% of the solar companies in Hawaiʻi are locally owned and operated, employing over 4,000 installers, contractors, sales representatives, electricians, and many others in good paying, sustainable jobs. If solar becomes unaffordable to most residents in Hawaiʻi, the industry itself would dissolve at a critical time in the climate crisis and thousands of jobs would be lost.
There have been indications—like in the video clip below—that legislators are considering eliminating Hawaiʻi's solar tax credit. The Sierra Club of Hawaiʻi opposes such efforts–in the short and long term, Hawaiʻi's people and businesses need the solar tax credit. We are calling on Hawaiʻi's leaders to preserve the solar tax credit—share your voice today!
Frequently Asked Questions:
What cost-savings does the tax credit provides to consumers?
The Hawaiʻi Energy Tax Credit allows individuals to claim an income tax credit of as much as 35% of the cost of equipment and installation of a residential photovoltaic (PV) system. The credit is capped at $5,000 per “5 kW system,” and multiple systems may be installed on one home.
The tax credit has also helped drop the average electricity bill in Hawaiʻi by 20% for all ratepayers from 2011-2018, not just those who benefited from the tax credit themselves. In our current economic landscape, Hawaiʻi's residents are looking to save as much money each month as they can.
Why preserve the tax credit now, when the state is looking at major budget cuts?
Moving out of the COVID-19 pandemic and its resulting economic impacts, Hawaiʻi needs a diversified economy more than ever. Relying on industries such as tourism are not sustainable—for our people or environment—and we now see how fragile a tourism-based economy can be. Supporting other industries, like the local solar industry, can help diversify our workforce and will likely be a growing industry as we track closer toward 100% renewable energy sources. The Solar Foundation estimates that for every megawatt of residential solar installed, 38.7 jobs are created.
It is also safe to assume that once a tax credit is ended, it is unlikely to be re-implemented in the future, so it is critical to keep the credit available to incentivize green energy and bolster the industry.
What is the benefit to the state?
Studies show that for each solar tax credit dollar spent, the state receives $1.97-$2.67 dollars in additional tax revenues—meaning that the state makes $137 million from a $70-million-a-year expenditure.
Hawaiʻi also has the ambitious goal of being 100% renewable energy powered by 2045. The Hawaiian Electric Company acknowledges that rooftop solar is essential to reach that goal. Eliminating the state's tax credit would not only cripple our local solar industry, but severely limit Hawai‘i's ability to reach our clean energy goals.