State paid $112M in renewable energy tax credits for 2014

The state paid out $112 million in tax credits for renewable energy investment in 2014, the largest state tax credit for the year.

Claims for renewable energy systems totaled $112.1 million for tax year 2014, down slightly from the $118.3 million in 2013, according to the tax credits report released by the state Department of Taxation earlier this month.

The Renewable Energy Technologies Tax Credit offers taxpayers who install rooftop solar systems a tax credit for 35 percent of the cost and a 20 percent credit for wind-powered systems. For single-family homes, the amount of the credit was capped at $5,000 for solar energy systems and $1,500 for wind-powered systems. For commercial operators, the credit was capped at $500,000 for wind or solar systems.

The Renewable Energy Technologies Tax Credit was 35.2 percent of the total tax credits claimed in tax year 2014.

Following renewable energy in the amount claimed by Hawaii taxpayers was the Income Tax Paid to Another State or to a Foreign Country, with taxpayers claiming $38 million; the High Technology Business Investment Tax Credit, with taxpayers claiming $37 million; and the Motion Picture, Digital Media and Film Production Income Tax Credit, with taxpayers claiming $34 million.

Some 14,902 claims were filed for the renewable energy systems credits. The majority of the credits were for solar systems with 14,144 solar claims filed. Roughly $55 million in tax credits went to individuals who installed solar systems. Corporations received $42 million in tax credits for solar systems.

Claims totaling about $39,000 were filed by individuals for wind systems.

“Somewhere over 80,000 homes and businesses will have benefited” from energy tax credits, said Marco Mangelsdorf, president of Provision Solar. “The state has reduced its consumption of fossil fuels in the generation of electricity and leads the nation in per capita and household PV (photovoltaic) installed. And the solar industry has provided thousands of jobs and commensurate income tax and sales tax revenues.”

Mangelsdorf said claims are likely to go down in subsequent reports due to reduced prices for solar energy systems as well as the state ending a popular incentive program.

The solar industry has been struggling since the state ended the “net energy metering” solar incentive program in October 2015. Net energy metering paid residents the full retail rate for excess electricity sent into the grid.

The state Public Utilities Commission replaced NEM with two programs called “grid-supply” and “self-supply.” Grid-supply credits customers roughly 8 cents less than those who enrolled in NEM. Self-supply encourages the use of batteries as it prohibits customers from sending excess energy into the electric grid. The only program currently available is self-supply because Hawaiian Electric Co.’s territories on Oahu, Maui and Hawaii island reached the limit the PUC placed on the amount of solar systems that could enroll in grid-supply earlier this year.

Makena Coffman, associate professor of Urban and Regional Planning at the University of Hawaii at Manoa, said the amount of tax credits claimed due to solar investment is also likely to decline as the cost for rooftop PV drops. Coffman also noted the pullback on the two incentive programs would result in a decline in tax credits claimed.

“The decline is due in part to dropping PV system costs and, probably more impactfully, the backlog of system installations due to the closure of the NEM and cap on grid-supply,” she said.

Coffman said it could turn around depending on what comes out of the PUC’s recent review of the programs.

In October officials started a process in which they may reconsider the rules for grid-supply and self-supply.

“It in many ways depends on what happens in phase two,” Coffman said.