Can I still get the federal solar tax credit in Hawaii in 2026?

The federal Residential Clean Energy Credit (Section 25D) expired on December 31, 2025. The only way to access federal benefits in 2026 is through a third-party-owned solar lease using Section 48E, but the contractor must begin construction before July 4, 2026. Most homeowners buying systems outright will not qualify for federal incentives. Hawaii's state tax credit remains available and is often more valuable than the expired federal credit.

How much can I save with solar in Hawaii?

Average savings range from $30,000 to $45,000 over 25 years, depending on your island, utility rates, and system size. Hawaii has among the highest electricity rates in the nation (around 30 cents per kWh), which makes solar particularly cost-effective. Your actual savings depend on your roof orientation, shading, and local utility net metering terms.

What is Hawaii's net metering policy?

Hawaii closed traditional retail-rate net energy metering (NEM) in October 2015. New residential solar customers cannot enroll in legacy NEM. Instead, the Public Utilities Commission established successor programs: Customer Grid Supply Plus (CGS+), which credits exports at a per-kWh value set by the PUC (well below the retail rate); Customer Self Supply (CSS), where the system is sized to serve on-site load only with no compensated exports; Smart Export, which pairs solar with storage and credits exports during evening hours; and Bring Your Own Device, which supports grid-services participation from customer-sited batteries. Your installer will help you choose the program that best fits your roof, consumption, and storage situation.

Do I have to pay property taxes on my solar system?

No. Hawaii exempts solar photovoltaic systems from property tax assessment. This exemption applies to the added value your system creates and is one of the most valuable incentives available to Hawaii homeowners.

Which Hawaii islands have the best solar potential?

All Hawaiian islands receive strong solar irradiance (5.0 to 5.5 kWh/m2/day). Maui and the Big Island tend to have slightly more consistent sun year-round, while Oahu experiences more winter cloud cover. Elevation, local weather patterns, and roof orientation matter more than island choice. A south-facing roof in Honolulu will outperform a shaded roof in Kona.

How do I find a reputable solar installer in Hawaii?

Look for installers with Hawaii-specific licensing, references from local homeowners, experience with your utility's interconnection process, and transparent pricing. Verify they are familiar with your island's building codes and utility requirements. Get at least three quotes and compare warranty terms, equipment brands, and timeline.

Hawaii Solar Incentives, Costs & Backup Power (2026)

Hawaii Solar in 2026: The Honest Picture

Hawaii presents a unique solar opportunity: the nation’s highest residential electricity rates (averaging 30 cents per kilowatt-hour) combined with excellent solar resources and strong state incentives. However, the loss of the federal Residential Clean Energy Credit at the end of 2025 changes the financial equation for most homeowners buying systems outright.

The good news is that Hawaii’s state-level incentives remain robust and often exceed what the federal credit would have provided. A combination of income tax credits, property tax exemptions, and sales tax breaks can offset 30 to 40 percent of your system cost. High electricity rates mean your solar system will generate substantial savings even without federal support.

This guide covers realistic costs, state-specific incentives, and what to expect in 2026 if you’re considering solar in Hawaii.

Average Solar System Cost in Hawaii (2026)

A typical 6 kilowatt (kW) residential solar system in Hawaii costs between $24,000 and $33,000 before incentives, or roughly $4.00 to $5.50 per watt installed. This is slightly above the national average, primarily because Hawaii’s island geography increases logistics costs and labor rates are higher than the mainland.

Cost breakdown for a 6 kW system:

Equipment (panels, inverter, racking, wiring): $9,000 to $12,000
Labor and installation: $6,000 to $9,000
Permitting, interconnection, and engineering: $2,000 to $3,000
Monitoring and miscellaneous: $1,000 to $1,500

System size varies by household. A 4 kW system (smaller home or lower usage) runs $16,000 to $22,000. An 8 kW system (larger home or high consumption) costs $32,000 to $44,000.

For current regional pricing data, see EnergySage’s Hawaii solar cost benchmarks.

Real Hawaii Homeowner Savings (Sample Scenarios)

Savings depend on your island, utility, roof quality, and system size. Here are five realistic examples:

Honolulu, Oahu (HECO) - 6 kW System:

Annual electricity bill: $3,600 (1,200 kWh/month at $0.30/kWh)
Annual solar production: 7,200 kWh (6 kW system, 5.2 peak sun hours)
Annual savings: $2,160 (60% of bill offset)
25-year savings: $54,000
Payback period: 8 years (after state tax credit and exemptions)

Maui (MECO) - 5 kW System:

Annual electricity bill: $3,000 (1,000 kWh/month at $0.30/kWh)
Annual solar production: 6,000 kWh
Annual savings: $1,800 (60% of bill offset)
25-year savings: $45,000
Payback period: 7 years

Hilo, Big Island (HELCO) - 7 kW System:

Annual electricity bill: $2,800 (higher irradiance, some cloud cover)
Annual solar production: 8,400 kWh
Annual savings: $2,100
25-year savings: $52,500
Payback period: 8 years

Kailua-Kona, Big Island (HELCO) - 6 kW System:

Annual electricity bill: $3,300
Annual solar production: 7,800 kWh (excellent sun exposure)
Annual savings: $2,340
25-year savings: $58,500
Payback period: 7 years

Lihue, Kauai (KIUC) - 5 kW System:

Annual electricity bill: $2,700
Annual solar production: 6,000 kWh
Annual savings: $1,800
25-year savings: $45,000
Payback period: 8 years

These scenarios assume 25-year system life, 0.5% annual degradation, and no major rate increases. Actual results vary based on roof angle, shading, equipment efficiency, and utility rate changes.

Hawaii Solar Incentives Still Available in 2026

Hawaii State Income Tax Credit

Hawaii offers a 35 percent income tax credit on the cost of a solar photovoltaic system, capped at $5,000 per system. This is one of the most valuable state-level incentives in the nation.

Example: A $28,500 system qualifies for a $5,000 credit (35% of $28,500 = $9,975, but capped at $5,000). You claim this credit on your Hawaii state tax return in the year the system is placed in service.

The credit applies to owner-financed systems and some lease arrangements. Check with your installer and tax professional on eligibility if you use financing.

Property Tax Exemption

Hawaii exempts solar photovoltaic systems from property tax assessment. The added home value from your solar system does not increase your property tax bill. This exemption is permanent and applies to all residential systems.

Example: A $28,500 system might add $35,000 to your home’s assessed value on the mainland. In Hawaii, that $35,000 is exempt from property taxation, saving you roughly $500 to $700 per year in property taxes over the system’s life.

Sales Tax Exemption

Hawaii exempts solar equipment and installation labor from the 4 percent state sales tax. This applies to panels, inverters, racking, wiring, and labor costs.

Example: On a $28,500 system, the 4 percent exemption saves $1,140.

Customer Grid Supply Plus, Customer Self Supply, and Smart Export

Hawaii closed traditional retail-rate Net Energy Metering (NEM) in October 2015 by order of the Public Utilities Commission. New residential solar customers cannot enroll in legacy NEM. Instead, the PUC established a set of successor programs that credit exports below the retail rate. Your installer will help you choose the program that fits your roof, consumption, and storage:

Customer Grid Supply Plus (CGS+): You consume your own solar first; any excess exported to the grid is credited at a per-kWh value set by the PUC (typically well below the retail rate, with rates that vary by island and utility). CGS+ is the most common choice for owners without batteries.
Customer Self Supply (CSS): Your system is sized and configured to serve on-site load only, with technical safeguards to prevent or minimize export. Exports receive no compensation. CSS works best with a battery and is common where the grid is constrained.
Smart Export: A storage-paired program that pays for energy exported during evening peak hours (typically 4 p.m. to 9 a.m.) while exports during midday are uncompensated. Best suited to customers who pair solar with a battery and want to export at high-value times.
Bring Your Own Device (BYOD): Allows participating customer-sited batteries to support grid services in exchange for incentives. Often combined with one of the export programs above.

The HECO companies (HECO on Oahu, MECO on Maui, HELCO on the Big Island) and KIUC on Kauai administer these programs with island-specific rates and enrollment caps. None of them credit exports at the full retail rate, and that is a permanent change from the pre-2015 NEM regime. Verify the current program rates and any enrollment caps with your installer and your utility before signing a contract.

HECO Solar Water Heating Rebate

Hawaiian Electric Company offers rebates up to $1,500 for solar thermal (water heating) systems. This is separate from photovoltaic (electricity) incentives and applies to solar hot water systems that reduce electric water heating load.

For a complete list of current incentives, see the DSIRE database.

Is Solar Worth It in Hawaii Without the Federal Credit?

The federal Residential Clean Energy Credit (Section 25D) expired on December 31, 2025. The only federal pathway in 2026 is a third-party-owned lease using Section 48E, which requires the contractor to begin construction before July 4, 2026. Most homeowners buying systems outright will not qualify for federal incentives.

However, Hawaii’s state incentives are strong enough to make solar financially sound:

State tax credit: $5,000
Property tax exemption: $500 to $700 per year (25-year value: $12,500 to $17,500)
Sales tax exemption: $1,140
Successor export programs (CGS+, CSS, or Smart Export): below-retail per-kWh credit for exports; self-consumed solar still offsets at full retail value

Combined, these incentives plus Hawaii’s high retail rates offset 30 to 40 percent of system cost and produce a payback of roughly 8 to 10 years for systems sized to match consumption (slightly longer for export-heavy systems on CGS+). Over 25 years, a typical Hawaii homeowner saves $35,000 to $55,000 with solar.

Decision framework:

If you plan to stay in your home 7+ years, solar is financially justified.
If you have a south-facing or west-facing roof with minimal shading, solar will perform well.
If your electricity bill exceeds $150 per month, solar will generate meaningful savings.
If you can afford the upfront cost or qualify for financing, the payback is reasonable.

Hawaii’s high electricity rates (30 cents per kWh) are the primary driver of solar value. Even without federal incentives, your system will offset a large portion of your bill.

Top Cities for Solar in Hawaii

Honolulu, Oahu: Largest market, strong HECO net metering, high electricity rates, good solar irradiance despite winter cloud cover.
Kailua-Kona, Big Island: Excellent year-round sun, lower cloud cover than Hilo, strong HELCO rates, ideal for maximizing production.
Maui (Lahaina, Kihei, Wailea): Good solar resource, MECO rates competitive with HECO, growing installer base.
Hilo, Big Island: Higher cloud cover but still viable, HELCO rates, good for homeowners with larger systems.
Lihue, Kauai: Smaller market but strong solar potential, KIUC cooperative rates, increasing installer availability.

What to Look for in a Hawaii Solar Installer

Hawaii-specific licensing and bonding. Verify the company holds a Hawaii Contractor License (Class A, B, or C) and is bonded. Check the Hawaii Department of Commerce and Consumer Affairs database.
Experience with your utility’s interconnection process. Each island utility (HECO, MECO, HELCO, KIUC) has different interconnection timelines and requirements. Your installer should have recent experience with your specific utility.
Familiarity with local building codes and permits. Hawaii counties have varying electrical and structural codes. Your installer should handle permitting and know local requirements.
Transparent, itemized pricing. Get a detailed quote showing equipment costs, labor, permitting, and incentive estimates separately. Avoid vague “system cost” quotes.
Equipment warranty and performance guarantees. Panels should have 25-year manufacturer warranties. Inverters typically carry 10-year warranties. Ask about labor warranty (5 to 10 years is standard).
References from local homeowners. Ask for at least three references from completed systems on your island. Call them and ask about installation timeline, post-installation support, and whether actual savings matched estimates.
Clear timeline and communication. Expect 2 to 4 weeks for permitting, 1 to 2 weeks for installation, and 2 to 6 weeks for utility interconnection. Your installer should provide a written timeline and update you regularly.

Next Steps for Hawaii Homeowners

When you request quotes, provide:

Your address (so installers can assess roof condition and utility rates)
Your average monthly electricity bill
Roof orientation and any shading issues
Your preferred financing method (cash, loan, lease, or power purchase agreement)

Most installers respond within 24 to 48 hours. Compare at least three quotes before deciding.

Want solar power without the installer process at all? A solar generator pairs portable panels with a battery in one box that ships to your door — no permits, no roof work, no sales calls. See our Hawaii backup power guide for the sizes that fit Hawaii homes and outage risks.

Sources for 2026 data: IRS Section 25D guidance, DSIRE Hawaii incentive database, Hawaii Department of Commerce and Consumer Affairs, Hawaiian Electric Company, Maui Electric Company, Hawaii Electric Light Company, Kauai Island Utility Cooperative, SEIA state market data, NREL solar resource maps, EnergySage cost benchmarks.