Hawaii’s solar incentive landscape is entering a period of significant transition, creating new challenges and considerations for businesses, commercial property owners, and developers evaluating future solar and battery storage investments.
Recent changes tied to Senate Bill 3125 (Act 24) introduce major revisions to Hawaii’s Renewable Energy Technologies Income Tax Credit (RETITC), one of the state’s most widely utilized renewable energy incentives. The legislation adds a statewide aggregate cap, certification requirements, and a future sunset date for the program.
Under the updated framework, the RETITC program will become subject to a statewide annual aggregate cap of $40 million beginning in calendar year 2027. The bill also establishes additional restrictions and a complete phaseout of the credit beginning January 1, 2031, creating new concerns around project timing, tax planning, and long-term incentive availability for renewable energy investments.
At the same time, the State indicated that efforts are underway to continue supporting renewable energy investment opportunities and sustain larger-scale renewable energy tax incentives moving forward.
For organizations considering energy investments, the current incentive environment still presents significant opportunities to improve project economics, reduce long-term electricity costs, and strengthen operational resilience. Especially following recent power disruptions caused by severe weather, energy resilience appears to be more important than ever for Hawai’i businesses and critical facilities.
Currently Available Federal Incentives
Section 45Y – Clean Electricity Production Tax Credit
A federal production-based tax credit available for qualifying clean electricity generation projects. Eligibility and project timelines may vary depending on construction start dates and placed-in-service requirements.
Section 48E – Clean Electricity Investment Tax Credit
An investment tax credit available for qualifying clean energy projects. While eligibility and project timelines may vary depending on construction start dates and placed-in-service requirements, battery energy storage systems (BESS) are generally not subject to the same deadlines.
Domestic Content Bonus Credit
Provides an additional federal incentive for projects utilizing qualifying U.S.-manufactured materials.
Energy Community Bonus Credit
Provides additional tax credit value for projects located in qualifying energy communities.
Current Hawai’i Incentive
Renewable Energy Technologies Income Tax Credit (RETITC)
Hawaii’s RETITC remains available for qualifying renewable energy systems, though the program is now subject to updated limitations, aggregate caps, and future phaseout provisions under SB 3125.
As Hawaii’s energy market continues to shift, organizations evaluating solar and battery storage projects may benefit from staying informed on policy changes and incentive timelines. Early planning may play an important role in maximizing available tax benefits while supporting long-term energy resilience and operational stability.
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