Why Hawaii Is Such a Strong Solar Market
Hawaii is the most expensive place in the US to buy electricity. Residential rates across the islands run between $0.40 and $0.43 per kilowatt-hour (kWh) as of 2026, compared to a national average of about $0.17–$0.18/kWh. That gap is the single most important factor in Hawaii's solar economics.
When your electricity costs more than twice the national average, the savings from every kilowatt-hour your solar panels produce are proportionally larger. A system that might deliver $1,000 a year in savings in a lower-rate state could deliver $2,000 or more in Hawaii, simply because each kWh is worth so much more.
Add to that Hawaii's year-round sun, which averages 5.5 to 6.5 peak sun hours per day across most of the islands, and you have the foundation for one of the strongest solar ROI cases in the country.
The Solar Incentives Available in 2026
Hawaii RETITC (State Tax Credit)
Hawaii's Renewable Energy Technologies Income Tax Credit, known as the RETITC, is the primary incentive available to new solar customers in 2026. It covers 35% of your total system cost, up to a cap of $5,000 for single-family residential installations. For most systems in the $15,000–$25,000 range, you will hit the cap and receive the full $5,000.
The credit is non-refundable, meaning it can only offset state income tax you actually owe. However, any unused portion can be carried forward for up to five years, and under certain conditions a reduced version of the credit may be refundable. To claim it, file Hawaii Form N-342 with your state income tax return for the year your system is installed.
Battery storage installed in the same tax year as your solar system is also eligible for the RETITC, under the same 35%/$5,000 cap. A battery installed in a later tax year does not qualify, so if you plan to add storage, doing it with the original installation is financially advantageous.
Federal Tax Credit: No Longer Available for Homeowners
The federal Residential Clean Energy Credit (also called the ITC) provided a 30% credit on the cost of solar installations. It was a major driver of solar adoption in Hawaii for over a decade. That credit expired on December 31, 2025, and is no longer available for residential systems placed in service in 2026 or later.
This is a meaningful change to the math. On a $20,000 system, the federal credit was worth $6,000. Without it, your net cost after the state RETITC is roughly $4,590 higher than it would have been a year ago. Payback periods are correspondingly longer.
Honolulu Property Tax Exemption
If you live in the City and County of Honolulu on Oahu, your solar installation is exempt from property taxes for 25 years. Solar panels typically increase a home's assessed value, which would normally mean a higher property tax bill. This exemption eliminates that added cost entirely. To claim it, file Form E-8-10.12 with the City of Honolulu Real Property Assessment Division by September 30 of the year before you want the exemption to take effect.
Similar property tax protections exist on other islands, but the specifics vary by county. Most areas in Hawaii generally do not assess added property tax on solar system value, but confirm with your county assessor before installation.
GEMS On-Bill Financing
The Green Energy Money Saver (GEMS) program, administered by the Hawaii Green Infrastructure Authority, provides low-interest solar financing to low- and middle-income homeowners. Loans carry a fixed rate of 5.5% for terms up to 25 years and are repaid through your monthly utility bill. No credit check is required. Check the HGIA website for current availability and funding status before planning around this program, as funding is issued on a first-come, first-served basis.
How Grid Export Works in Hawaii
Hawaii eliminated traditional net metering (where exported power is credited at the full retail rate) several years ago. New residential solar customers in 2026 connect under utility export programs that credit surplus power at rates well below what you pay to buy electricity from the grid.
Hawaiian Electric's current program is called Smart Renewable Energy Export (SRE). Under this structure, power you export to the grid earns a credit based on a utility-set rate that varies by island and time of day. These export rates are typically in the range of $0.10–$0.18/kWh, compared to the retail rate you pay of $0.40+/kWh. Credits roll over month to month but expire at the end of a 12-month period. The export rate is locked in at the time of installation for seven years.
The practical implication is important: exporting power to the grid is not very valuable in Hawaii. Using the power you produce, instead of sending it to the grid and buying it back later at full retail, is where the real savings come from. This fundamentally changes how you should think about system sizing and whether to add battery storage.
KIUC on Kauai uses different program structures. MECO and HELCO follow similar frameworks to HECO but with island-specific rates. Always verify current program details and enrollment availability with your specific utility before installation.
Why Battery Storage Makes Sense in Hawaii
Hawaii has the highest residential battery storage attachment rate of any state, and the economics explain why. When export rates are well below retail rates, storing excess daytime solar production in a battery and using it in the evening avoids buying expensive grid power. Each kilowatt-hour you shift from grid purchase to stored solar is worth the full retail rate, which in Hawaii is $0.40 or more.
A battery also provides energy security, which matters on islands where grid outages happen and utility interconnection can be slower to restore than on the mainland.
When you install battery storage alongside your solar panels in the same tax year, the battery cost is included in your RETITC calculation, making the state credit apply to the full combined system cost (still subject to the $5,000 cap).
Running the Numbers: A Typical Hawaii Installation
Here is a representative example for a Hawaii homeowner in 2026, using conservative assumptions.
System size: 8 kW solar + 10 kWh battery
Gross installed cost: approximately $28,000–$32,000
Hawaii RETITC: $5,000 (cap)
Net cost after state credit: approximately $23,000–$27,000
An 8 kW system in Hawaii, averaging 5.5–6.0 peak sun hours, will produce roughly 14,000–16,000 kWh per year. If a significant portion of that production is self-consumed (via the battery), annual savings at $0.41/kWh could reach $4,500–$5,500. At that savings rate, payback would occur in roughly 5–6 years on the optimistic end, or closer to 8–9 years if self-consumption is lower and more power is exported at the below-retail SRE rate.
These are estimates. Your actual savings depend on your electricity usage, your self-consumption rate, your roof's orientation and shading, and which island and utility you are on. Use our Solar ROI Calculator to run your specific numbers.
Hawaii's Utilities: Who Serves Which Island
Hawaii's solar market is different from the mainland because each island has its own utility with its own rules. Before getting quotes, confirm which utility serves your property.
Hawaiian Electric Company (HECO) serves Oahu. HECO is the largest utility in the state and serves the most densely populated island. Its Smart Renewable Energy Export program is the primary grid interconnection option for new residential solar customers.
Maui Electric Company (MECO) serves Maui, Molokai, and Lanai. MECO operates under the same parent company as HECO (now part of NextEra Energy) and uses a similar export framework, but with island-specific rates and program terms.
Hawaii Electric Light Company (HELCO) serves the Big Island (Hawaii Island). HELCO's grid faces different reliability considerations than Oahu, and battery storage for backup power is especially popular on Hawaii Island.
Kauai Island Utility Cooperative (KIUC) serves Kauai. KIUC is a member-owned cooperative and operates differently from the HECO family of utilities. It has its own solar interconnection programs and tariffs, which you should confirm directly before installation.
HOA Rights and Solar Access
Hawaii law protects homeowners' rights to install solar systems. Homeowners associations can impose reasonable restrictions on solar panel placement, but they cannot prohibit installation outright, and they cannot require changes that increase system costs by more than $1,000 or reduce system output by more than 10%. If your HOA has attempted to block a solar installation, that restriction is likely unenforceable under state law.
What to Watch: Hawaii's 100% Clean Energy Goal
Hawaii has set a statutory goal of 100% renewable electricity by 2045, codified under HRS 269-92. This policy commitment means the state is consistently oriented toward supporting solar adoption. New incentive programs for low-income households, community solar, and grid modernization may emerge over the coming years.
It also means that grid-level changes, including shifts to time-of-use pricing and changes to export credit structures, are likely as renewables make up a larger share of generation. If you are sizing a system today, factor in the possibility that grid dynamics and export rates may shift over the life of your system.
Is Solar Worth It in Hawaii in 2026?
For most Hawaii homeowners who own their home and plan to stay for at least 7–10 years, solar remains a strong investment in 2026. The loss of the federal tax credit makes the upfront cost higher and extends the payback period compared to prior years. But Hawaii's electricity rates are so high that the long-term savings case is still compelling.
The key is designing the system around self-consumption. Pair solar with battery storage to shift your production to evening hours and avoid buying grid power at retail rates. Get quotes from installers who are familiar with your specific island's utility program and interconnection queue. The interconnection process on Oahu and Maui in particular has historically had wait times of several months, so plan ahead.
If you have low state tax liability and cannot fully use the RETITC in the first year, that is not a dealbreaker. The credit carries forward for up to five years. Work with a tax professional to understand how to structure the timing if needed.