News Analysis

Solar Water Heating Required in New Homes in Hawaii

July 29, 2008

The law will rescind the current state tax credit worth 35% of the cost of a new solar heating system, starting on December 31, 2009. Utility rebates of $1,000 now available will also disappear for houses permitted after that date. The Hawaii Solar Energy Association (HSEA) estimates the cost of a solar water heater installation at $6,000; without state and utility incentives, the portion paid by the user will increase by $2,450, and if the federal tax credit, set to end in 2008, is not renewed, it would increase by another $1,800.

The Hawaii Association of Realtors, the Building Industry Association of Hawaii, and the state’s gas utility opposed the law. Surprisingly, so did HSEA, which described the law as “grossly flawed,” although it supported the Legislature’s stated goals. HSEA’s Rick Reed argued that the bill was not needed, noting that Hawaii has “the most robust and successful solar water heating market in the country.” According to Reed, in 2007, about 5,500 new solar hot water systems were installed, accounting for almost half of the new residential systems in the U.S.