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After suffering a loss with state regulators dialing back on solar incentive programs, Hawaii’s solar industry caught a break as Congress approved extending a tax credit for renewable-energy projects.
On Friday, Congress approved a five-year extension to a 30 percent federal tax credit for utility-scale wind projects, utility solar projects and residential solar systems. The wind tax credit was set to expire at the end of this year. The solar tax credit was to sunset at the end of December 2016.
Mark Duda, principal at Distributed Energy Partners, a Honolulu-based commercial solar installer, said he hopes the federal extension will remind state policymakers about the importance of maintaining incentives for renewable-energy growth.
“The extension of the federal tax credit is hugely significant because it reflects the Paris consensus that climate change is humankind’s policy priority No. 1,” Duda said. “Hawaii, in contrast, has been frittering away the leadership position it once enjoyed in renewable energy, and I sincerely hope this signal from the federal government serves as a wake-up call.”
In October the Public Utilities Commission ended the net energy metering program, which credited solar owners the full retail rate for the power their systems produce. In the same order, the PUC also announced a cap on new residential and commercial solar projects that export power to the grid. The PUC will allow only 25 additional megawatts, or about 4,500 new systems, on Oahu.
After the cap is reached, which is expected to happen by mid-2016, new solar projects will no longer be allowed to export power to the grid, although solar customers can still buy power from the grid at the full price. Most solar projects will likely be linked to a battery so customers can use the power generated during the day to power their homes at night.
Hawaii does still offer a 35 percent state tax credit for solar projects.
The 30 percent federal tax credit extension alleviates pressure on some of Hawaii’s solar developers.
“There was a collective sigh of relief,” said Bob Dewitz, owner of Honolulu-based American Electric Co.
Dewitz said that the extension allowed the company to take workers off overtime.
“We’re doing a lot of solar projects,” Dewitz said. “There was a huge push on us to complete these by year-end.”
The credit will remain 30 percent through 2019, then will drop to 26 percent in 2020, then fall to 22 percent in 2021.
Colin Yost, principal at RevoluSun, said that the industry should try to build as much solar as possible over the next six years with the federal support.
“The five-year extension of the federal solar tax credit affirms the federal government’s strong support of solar energy and accelerating the transition away from fossil fuels. It’s also great news for Hawaii’s 100 percent renewable goal, so long as we avoid getting in our own way and stop making it difficult for consumers to connect solar to the grid.”
SunEdison, owner of three of the four utility-scale solar projects the PUC approved in August, said it is still working to have the projects in place and operational before December 2016.
“The extension of the federal solar investment tax credit is good news,” said Crystal Kua, spokeswoman for SunEdison. “We now have some additional time to develop our three approved projects in Mililani, Waipio and Kawailoa, but we’re still aiming to complete construction by the end of 2016.”
The four projects approved by the PUC are the EE Waianae Solar facility to be built near Waianae High School, Kawailoa Solar to be built in Haleiwa, Lanikuhana Solar to be built southwest of Mililani, and Waiawa PV. The four projects collectively could produce 137.2 megawatts of renewable energy, and at their peak could power more than 22,000 homes.
Kua said the extension allows for a few more years to develop future low-cost utility-scale solar projects.
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