State of Hawaii and Federal Incentives
This webpage offers examples of the variety of local, state, and federal incentives designed to encourage the growth and proliferation of renewable energy technologies. Contact the appropriate regulatory agency for more information. Check with your tax professional on the specifics of your project regarding this incentive.
State of Hawaii Incentives
1) Hawaii Renewable Energy Technologies Income Tax Credit
Summary: The Hawaii Department of Taxation oversees the Hawaii Renewable Energy Technologies Income Tax Credit.
2) Database of Renewable Energy and Energy Efficiency Incentives Available in Hawaii
Summary: The North Carolina Clean Energy Technology Center currently provides a free and open resource summarizing the incentives available for clean energy technologies in each state.
3) Property Tax Incentives
Summary: Certain counties within the State of Hawaii offer property tax incentives related to renewable energy and energy efficiency property investments.
4) 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.
5) Hawaii Foreign Trade Zone
Summary: Hawaii’s Foreign Trade Zone Program supports manufacturing and small business activity in Hawaii by encouraging companies to compete in export markets and providing growth to new companies that import and export merchandise, including renewable energy and energy efficiency equipment.
6) Renewable Fuels Production Tax Credit
DBEDT is accepting notifications from renewable fuels producers planning to pursue Hawaii’s new renewable fuels production tax credit (RFPTC). Taxpayers wishing to claim the credit are required to provide written notification to DBEDT of their intent to begin production of renewable fuels. Additionally, they are required to file a notification 30 days before the start of production. Please see the “Notice of Intent/Notice to Start Production Form” and instructions below.
Starting in 2018 calendar year, to qualify for the RFPTC, taxpayers must produce at least 2.5 billion British thermal units (Btu) of renewable fuels per year. The credit is equal to 20 cents per 76,000 Btu of renewable fuels. The credit is capped annually at $3 million per taxpayer, and $3 million in the aggregate. Additionally, after a full year of production, Taxpayer must completely fill out and submit to DBEDT the “RFPTC – Independent Third Party Certified Statement” forms. Please reference form instructions on guidance on how to fill out each of the forms.
For the complete details of the RFPTC requirements, Taxpayers should review and follow: (1) Hawaii Revised Statutes, 235-110.31 as amended to date; and (2) the Department of Taxation’s Tax Information Release (TIR) No. 2018-03.
Renewable Fuels Production Tax Credit Process/Timeline Graphic
(Click to enlarge)
Visit the Database of State Incentives for Renewables and Efficiency (DSIRE) website for information on the federal tax credits available for renewable energy and energy efficiency systems.
1) Business Energy Investment Tax Credit (ITC)
Summary: The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently in December 2015. The table below shows the value of the investment tax credit for each technology by year. The expiration date for solar technologies and wind is based on when construction begins. For all other technologies, the expiration date is based on when the system is placed in service (fully installed and being used for its intended purpose).
|PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat||30%||30%||30%||30%||26%||22%||10%||10%|
|Hybrid Solar Lighting, Fuel Cells, Small Wind||30%||30%||30%||30%||26%||22%||22%||N/A|
|Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems||10%||10%||10%||10%||10%||10%||N/A||N/A|
2) Renewable Energy Production Tax Credit (PTC)
Summary: Wind facilities commencing construction by December 31, 2019 can qualify for this credit. The value of the credit steps down in 2017, 2018 and 2019. See below for more information. For all other technologies, the credit is not available for systems whose construction commenced after December 31, 2016.
3) Residential Renewable Energy Tax Credit
Summary: A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer.
4) Corporate Depreciation (Modified Accelerated Cost-Recovery System)
Summary: The Consolidated Appropriations Act, signed in December 2015, extended the “placed in service” deadline for bonus depreciation. Equipment placed in service before January 1, 2018 can qualify for 50% bonus depreciation. Equipment placed in service during 2018 can qualify for 40% bonus depreciation. And equipment placed in service during 2019 can qualify for 30% bonus depreciation. Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes:
- a variety of solar-electric and solar-thermal technologies
- fuel cells and microturbines
- geothermal electric
- direct-use geothermal and geothermal heat pumps
- small wind (100 kW or less)
- combined heat and power (CHP)
- the provision which defines ITC technologies as eligible also adds the general term “wind” as an eligible technology, extending the five-year schedule to large wind facilities as well
These resources are advisory and for informational purposes only and may not be relied upon to determine the available incentives. Contact the appropriate agencies for information on local, state, and federal incentives for renewable energy. The listings, associations, and contacts herein are provided for informational purposes only and are not meant to be all inclusive. The Hawaii State Energy Office 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 wish be to added to the content found in these following summary pages, we welcome you to contact us and provide your information for listing.
For comments or questions about the Developer & Investor Center, please contact the Hawaii State Energy Office.