Hawaii homeowners and businesses installed a record amount of solar power generating capacity in the second quarter of this year, according to a new industry report.

Hawaii added 16.6 megawatts of solar generating capacity during the April-to-June period, a 12 percent increase from 14.8 megawatts in the previous quarter, according to the report produced by the Solar Energy Industries Association and GTM Research.

The report noted that there is a growing trend in Hawaii and elsewhere in which homeowners are opting to have solar systems installed with no upfront cost. Under the most popular arrangements, a third party owns the system and either leases it back to the homeowner or sells the electricity to the homeowner. In both cases, the homeowner pays the third party less than the rates charged by the local electric utility.

The third party usually raises the financing from investors, who are attracted to the tax benefits and steady stream of income that come from owning a stake in the solar systems. The financing vehicle has attracted more than $600 million in new investments in recent months, according to the report.

Although the report didn’t have firm numbers for Hawaii, its researchers estimated that anywhere from 70 percent to 80 percent of the solar systems installed in the Aloha State are being done this way.

While the price of solar systems continues to fall, many homeowner still can’t afford the upfront cost, according to the report.

"For homeowners looking to lower their energy costs or to reduce their environmental footprint, the option to avoid upfront payments and have a contract with a company to monitor and repair the PV (photovoltaic) array is appealing," the report said.

The latest increase brings Hawaii’s cumulative solar energy generating capacity to 113 megawatts, enough to provide the power needs of about 24,000 homes. Data for the report were gathered from utilities and state agencies.

The 16.6 megawatts installed ranked Hawaii 10th among the top 25 states for the three-month period, according to the report. Of the 16.6 megawatts, 7.9 were installed at residences and 8.7 were at commercial buildings.

Although Hawaii trailed much larger states like California, Arizona and Texas on an absolute basis, it has traditionally compared more favorably on a per capita basis. Hawaii’s 62.6 watts of installed PV per person in 2011 was third-highest of any state, according to the Interstate Renewable Energy Council.

The top 25 states installed a total of 742 megawatts of photovoltaic capacity in the second quarter of this year, a 45 percent jump from 512 megawatts in the first quarter, the Solar Energy Industries Association report said.

Falling prices for solar panels continued to drive down the cost for residential PV systems in the second quarter, with the average cost nationwide declining to $32,435 from $37,144 a year earlier before tax breaks, the report said. The average installed price per watt for a residential system fell to $5.46 from $5.81.

Hawaii’s 35 percent state tax credit for PV system installations is one of the nation’s most generous and can be combined with a 30 percent federal tax credit. The loss of state revenue as a result of the tax credit has stirred debate about whether it should be curtailed.

The state Department of Business, Economic Development and Tourism told the state Council on Revenues recently that the cost of the renewable energy tax credit has grown from $34.7 million in 2010 to an estimated $173.8 million in 2012. However, some in the local solar industry say the amount is overstated because it is based on building permit applications that may never result in completed projects.