Hawaii residents and businesses, rushing to take advantage of a solar tax credit before it was reduced, added 108.7 megawatts of solar energy generating capacity to the grid last year, up 169 percent from 40.4 megawatts installed in 2011.
The amount was the second highest of any state on a per capita basis, but new rules limiting the amount of tax credits that can be claimed are expected to slow the pace of PV installations in 2013, an industry trade group reported today.
The Solar Energy Industry Association reported there were 3,313 megawatts of PV generation added nationally last year, up 76 percent from 2011. Hawaii’s 2012 PV total is equivalent to the power consumed by about 22,500 homes using 600 kilowatt hours a month.
About half of Hawaii’s PV generating capacity was installed in the fourth quarter of the year as electric utility customers rushed to beat the tax change that went into effect on Jan. 1.
The amount of PV installed in Hawaii last year was more than in all the previous years combined.
"2012 proved to be a breakout year for the Hawaiian market, which experienced significant growth across all market segments," according to the association report. "Hawaii’s ample solar irradiance, extremely high retail electricity rates, favorable project economics due to in-state tax credits, and falling equipment costs all combined to shape this banner year."
When the association’s numbers are calculated on a per capita basis, Hawaii ranked second in the nation last year in the amount of PV installed. Arizona led the nation with 108 watts of installed capacity per capita followed by Hawaii with 78 watts per capita.
Unlike most other states, Hawaii’s residential market accounted for the bulk of the state’s installations last year at 57.3 megawatts. Businesses installed 37.8 megawatts, while installations for utilities accounted for 13.6 megawatts. Nationally, residential projects made up only 27 percent of all installations.
The report projected that the growth rate for PV installations in Hawaii will slow from last year’s torrid pace to a 55 percent gain this year.
"We anticipate that installation numbers will grow in 2013, but not as quickly as before," the report’s authors wrote.
The state Department of Taxation tightened administrative rules for renewable energy tax credits last year in response to concerns that lost revenue from the credit was costing the state too much as PV installations soared.
State lawmakers are considering legislation this session that would supersede the administrative rule changes. The latest proposal would allow for a 35 percent renewable energy tax credit, similar to what was available before Jan. 1, but reduce the size of the credit over time.
The report included a state-by-state comparison for PV system pricing. The average cost for a residential installation in Hawaii last year was $5.24 per watt, the seventh-highest out of 27 states and the District of Columbia. Washington state was the highest at $6.30 a watt. Illinois was the lowest at $3.45 a watt.
