Hawaii’s solar industry is going through a shakeout with a 40 percent loss in jobs, a nearly 30 percent drop in building permits and at least one company shutting down.

Many in the industry attribute the sliding numbers to the state’s decision to end a solar incentive program in October 2015.

Over the past year 442 solar employees lost their jobs, there was a 29 percent reduction in the number of permits pulled by contractors to install solar energy systems from the year before, and one of the top 25 contractors lost a license.

“It has been quite a recession of business,” said Rick Reed, president of Inter-Island Solar Supply. “It’s not a grinding halt, but it really has slowed down substantially.”

Reed, whose company supplies equipment to the majority of installers in the state, said he has seen a 16 percent reduction in volume compared with last year and that volume is down 28 percent compared with two years ago.

Reed said he is worried how his customers will weather the changes.

“They are just here a lot less frequently, and their challenges in the marketplace are significantly greater than a year or two ago,” Reed said.

Ron Hooson, founder of Solar Inspectors Hawaii, said business was hit because the state’s decision caused uncertainty in the market.

“The number of currently active rooftop PV companies is dropping by the week,” Hooson said.

According to Hooson, there were 55 PV companies that pulled at least 10 permits in 2015, and currently only 28 companies have pulled 10 or more PV permits this year.

In October 2015 the state Public Utilities Commission halted Hawaii’s generous incentive for rooftop solar. The program gave solar customers credit equal to the retail rate for the excess energy their systems sent to the grid. Many of those who qualified were able to get their electrical bill to drop to about $17 a month through the program called net energy metering, or NEM.

When ending the program, PUC Chairman Randy Iwase said it was fully subscribed and that he wanted to make room for other renewable-energy technology to be connected to the grid.

When it ended NEM, the PUC replaced it with two other options, called grid-supply and self-supply. And now only one of the two incentive programs, self-supply, is available.

Hawaiian Electric Co.’s service territories have met the state’s limit placed on grid-supply. The program let customers export excess energy to the grid and credited owners 15 cents a kilowatt-hour for the energy their systems sent. The rate was roughly 8 cents less than the retail rate that had been offered through the NEM program.

Self-supply, the only solar system now allowed, prohibits solar owners from sending excess energy into HECO’s grid. Most systems need batteries to abide by self-supply requirements.

Colin Yost, principal at solar technology provider RevoluSun, said the industry could be cut in half.

“It’s like coral bleaching. Is the ecosystem going to be killed off? No. Maybe 50 percent of it,” Yost said. “It’s not a good thing. There is less diversity, less consumer choice.”

In September, PV permits on Oahu were down 40 percent compared with the same month last year. January-September PV permits were down 29 percent compared with the same period last year, according to Marco Mangelsdorf, who tracks rooftop solar permits and is president of Hilo-based ProVision Solar.

There were 3,789 PV permits issued from January to the end of September, compared with 5,312 issued during those eight months last year.

Also provided in Mangelsdorf’s monthly data are the names of the top 25 contractors who pulled the most PV permits in 2016.

Bonterra Hawaii LLC, one of the top 25 contractors according to Mangelsdorf’s data, is no longer in “good standing” with the state Business Registration Division. The solar sales and installation company’s license expired in September. The solar company’s Yelp page shows that the business is closed.

Bonterra did not respond to voice mails requesting comment.

Joe Saturnia, president at Island Pacific Energy LLC, another one of the top 25 contractors, said the change in incentives hit everyone in the industry in some way.

“It’s affected everybody,” Saturnia said. “I think the collateral damage from that is when you see Bonterra and others cease operations.”

In July, Hawaiian Island Solar auctioned off approximately $800,000 in materials, including solar panels, inverters, rails and optimizers, with Oahu Auctions.

Yost said the solar industry will survive the shakeout.

“What we have done in Hawaii is taken an industry that was successful and growing and leading us in the right direction and we put a tire boot on it. … Certain players of the industry are dying, are leaving,” Yost said. “We didn’t die. We aren’t going to die as an industry.”