State of Hawaii and Federal Incentives

There are a variety of state and federal incentives designed to encourage the growth and proliferation of renewable energy technologies. Click on the incentive for greater detail (as listed and summarized by the Database for State Incentives for Renewables and Efficiency)

State of Hawaii Incentives

1) Corporate Tax Credit for Solar and Wind Energy 
Summary: The Hawaii Energy Tax Credits allow individuals or corporations to claim an income tax credit of 20% of the cost of equipment and installation of a wind system and 35% of the cost of equipment and installation of a solar thermal or photovoltaic (PV) system. A new provision was added to the tax credits in June 2009 allowing the tax credit to be refundable under certain conditions.  For solar energy systems, a taxpayer can reduce the eligible credit amount by 30%.  If this reduced amount exceeds the amount of income taxes to be paid by the taxpayer, the excess credit will be refunded to the taxpayer. Consult with your tax advisor as to how this credit may pertain to your specific project.  
Source: Database of State Incentives for Renewables & Efficiency website

 2) Performance-Based Incentive (Feed-in Tariff)
Summary: 
Several renewable energy technologies are eligible for the feed-in tariff, including solar photovoltaics (PV), concentrating solar power (CSP), on-shore wind and in-line hydro power.  Under this program, qualified projects will receive a fixed rate over a 20-year contract.  There are three tiers for rates, with the tiers and rates differentiated by technology and system size.  The maximum caps on system size vary by island and by technology.
 

Feed-in Tariff Rates*

Tier Technology Eligible System Size Rate
Tier 1 Photovoltaics Less than or equal to 20 kW $0.218/kWh
Tier 1 Concentrating Solar Power Less than or equal to 20 kW $0.269/kWh
Tier 1 On-Shore Wind Less than or equal to 20 kW $0.161/kWh
Tier 1 In-line Hydro Less than or equal to 20 kW $0.213/kWh
Tier 2 Photovoltaics Greater than 20 kW, less than or equal to 500 kW $0.189/kWh
Tier 2 Concentrating Solar Power Greater than 20 kW, less than or equal to 500 kW $0.254/kWh
Tier 2 On-Shore Wind Greater than 20 kW, less than or equal to 100 kW $0.138/kWh
Tier 2 In-line Hydro Greater than 20 kW, less than or equal to 100 kW $0.189/kWh
Tier 3 Photovoltaics Greater than 500 kW, less than or equal to 5 MW $0.197/kWh
Tier 3 Concentrating Solar Power Greater than 500 kW, less than or equal to 5 MW $0.315/kWh
Tier 3 On-Shore Wind Greater than 100 kW, less than or equal to 5 MW $0.120/kWh
Baseline FIT Other RPS-Eligible Renewable Energy Technologies** Maximum size limits for facilities

 

* These rates are based on a system taking the 35% tax credit; if the tax credit refund option is used, there are higher rates allowed.  See HECO’s tariff for more information.
** Bio fuel projects and hybrid projects using conventional fuels or bio fuels are not eligible for the FIT.
(Source: Database of State Incentives for Renewables & Efficiency website)

Please click on the following links for FIT rates on:
Maui Electric Company
Hawaii Electric Light Company (Big Island)  
Kauai Island Utility Cooperative – Call 808-246-4300 for more information

Contacts for FIT Program:

Hawaii Public Utilities Commission (808-586-2020)
Email: Hawaii.PUC@hawaii.gov

Hawaiian Electric Company
Energy Procurement (808-543-7319)
Email: FIT@HECO.com

3) Property Tax Incentive
Summary: 
In September 2009, the Honolulu City Council unanimously passed Bill 58 to create a real property tax exemption for alternative energy improvements in Honolulu. This bill became effective October 1, 2009. The alternative energy property installed on a building, property, or land is exempt from property taxes for 25 years. For the purposes of this property tax exemption, alternative energy sources include solar, wind, hydro power, tidal, wave, solid waste and increased efficiency in fossil-fuel burning facilities. Energy sources based on fossil fuels, nuclear fuels or geothermal energy are not eligible for this exemption. Check with your tax professional on the specifics of your project regarding this incentive.
Source: Database of State Incentives for Renewables & Efficiency website

4) Kauai County Property Tax Incentive – Property Tax Ordinance 916
Summary: The purpose of this ordinance is to create incentives for Kauai County property owners to invest in renewable energy and other clean alternatives by providing a real property tax exemption. Effective in 2011, eligible renewable technologies may include solar, geothermal ,biomass, fuel cells, hydroelectric and methane from solid waste. Check with your tax professional on the specifics of your project regarding this incentive.

5) Hawaii Enterprise Zones 
Summary:  Currently, wind energy producers may be eligible for this incentive that provides a 100% general excise tax exemption as well as reductions in state income taxes in exchange for demonstrated job growth. This incentive is available statewide in designated geographic areas. Please click on the link for further details.

 

Federal Incentives

(As listed and summarized by the Database for State Incentives and Renewables and Efficiency.)

 1) Business Energy Investment Tax Credit (ITC- 1603)
Summary: The American Recovery and Reinvestment Act of 2009 allows taxpayers eligible for the federal renewable electricity production tax credit (PTC)** to take the federal business energy investment tax credit (ITC) (available for eligible systems placed in service on or before December 31, 2016).  The Treasury Department issued Notice 2009-52 (PDF) in June 2009, giving limited guidance on how to take the federal business ITC instead of the federal renewable electricity production tax credit.  Systems that are generally eligible are: solar, photovoltaics, fuels cells, small wind turbines, geothermal, and micro turbines. Check with your tax professional on the specifics of your project regarding this incentive.
Source: Database of State Incentives for Renewables & Efficiency website

 2) Renewable Energy Production Tax Credit (PTC)
Summary: 
The federal renewable electricity production tax credit (PTC) is a per-kilowatt-hour tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. Recent legislation revised the credit by: (1) extending the in-service deadline for most eligible technologies by three years (two years for marine and hydro-kinetic resources); and (2) allowing facilities that qualify for the PTC to opt instead to take the federal business energy investment credit (ITC) or an equivalent cash grant from the U.S. Department of Treasury. The ITC or grant for PTC-eligible technologies is generally equal to 30% of eligible costs. The list below illustrates the current technologies eligible along with their corresponding in service deadlines and credit amounts. Check with your tax professional on the specifics of your project regarding this incentive.
Source: Database of State Incentives for Renewables & Efficiency website

Resource Type

In-Service Deadline

Credit Amount

Wind December 31, 2012 2.2¢/kWh
Closed-Loop Biomass December 31, 2013 2.2¢/kWh
Open-Loop Biomass December 31, 2013 1.1¢/kWh
Geothermal Energy December 31, 2013 2.2¢/kWh
Landfill Gas December 31, 2013 1.1¢/kWh
Municipal Solid Waste December 31, 2013 1.1¢/kWh
Qualified Hydroelectric December 31, 2013 1.1¢/kWh
Marine and Hydrokinetic (150 kW or larger)** December 31, 2013 1.1¢/kWh

 

3) Corporate Depreciation
Summary: 
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions.The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, micro turbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

In December 2010, the provision for bonus depreciation (50% first-year) (26 USC § 168(k)) was amended and extended yet again by The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853). Under these amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 qualifies for 100% first-year bonus depreciation. For 2012, bonus depreciation is still available, but the allowable deduction reverts from 100% to 50% of the eligible basis. To qualify for bonus depreciation, a project must satisfy these criteria:

  • The property must have a recovery period of 20 years or less under normal federal tax depreciation rules;
  • The original use of the property must commence with the taxpayer claiming the deduction;
  • The property generally must have been acquired during the period from 2008 – 2012; and
  • The property must have been placed in service during the period from 2008 – 2012.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562.  Please consult your tax professional as to the specifics of your project as it relates to this incentive.
Source: Database of State Incentives for Renewables & Efficiency website

 

 

Important Notice:
Please note that the listings, the associations and contacts herein are provided for informational purposes only and are not meant to be all inclusive. The Department of Business, Economic Development and Tourism does not endorse or certify the individuals, firms or businesses on these lists. If you are a firm that engages in the specialization of commercial scale renewable energy project development, finance, consulting or investment services, and wishes to be added to the content found in these summary pages, we welcome you to contact us and provide your information for listing.  Please contact Cameron Black at cameron.b.black@dbedt.hawaii.gov.