The newly passed and signed federal Inflation Reduction Act is likely to dramatically reduce the cost for a typical Hawaii homeowner to install a rooftop solar system while creating new “green-collar” unionized solar jobs, potentially rejuvenating the islands’ once-stalled solar energy industry and helping the state reach its clean energy goals.

The typical $16,000 rooftop solar energy project for an Oahu family of four would be reduced to just $6,000 to $7,000 through a new, 30% federal income tax credit and a state tax credit of an additional 35%. The federal income tax credit will be available for the next 10 years.

U.S. Sen. Brian Schatz, D-Hawaii, emphasized the Inflation Reduction Act’s benefits available to Hawaii during an appearance Monday on the Honolulu Star-Advertiser’s “Spotlight Hawaii” livestream program. His comments coincide with hot late-August temperatures while utility company Hawaiian Electric forecasts that the shutdown of the coal-driven, 30-year-old AES Corp. power plant at Campbell Industrial Park on Wednesday will result in a $15 — or 7% — increase in the monthly bill for a typical Oahu residential customer using 500 kilowatt-hours of electricity.

The increase, which amounts to 3 cents per kilowatt-hour, is expected because until Hawaiian Electric can draw from a larger inventory of renewable energy sources, it will rely on more power from oil, which costs more than coal. The AES plant produces about 10% of all the electricity consumed on Oahu and is the biggest, cheapest and dirtiest source of energy tapped here.

The new federal law also includes a 30% federal credit to buy a stand-alone battery storage system, clarifying previous confusion for homeowners who installed a solar system and later wanted to buy battery storage.

Robert R. “Rocky” Mould, executive director of the Hawaii Solar Energy Association, said the upshot is reassurance for island homeowners interested in purchasing stable, long-term rooftop solar systems — with the added benefit of helping Hawaii’s long-term energy goals of producing 100% of power from renewable sources by 2045 while generating good-paying green- collar jobs in fields such as engineering and architecture as well as in installation work.

Further, competition among solar companies could result in lower bids for individual homeowners, he said. “The Inflation Reduction Act is going to be good for our industry and increase demand, which should increase the number of companies bidding for those projects,” Mould said.

Hawaiian Electric’s Climate Action Plan, developed in 2021 before the landmark legislation was passed, calls for 50,000 more rooftop solar systems on customers’ homes and businesses across its service territory by 2030. So far, there are an estimated 92,000 rooftop solar systems statewide, with just under 65,000 on Oahu.

In a statement to the Star-Advertiser, Hawaiian Electric said, “We need robust participation in customer-sited rooftop solar and storage programs as well as grid-scale renewable energy projects to achieve the state’s clean energy goals.”

The cost benefits to consumers through the federal Inflation Reduction Act represents a new phase for Hawaii’s rooftop solar industry and consumers, who were once able to sell their excess energy back to Hawaiian Electric and recoup their out-of-pocket costs. The elimination of selling back energy represented “a significant hit to our industry,” Mould said.

Oahu saw a peak of 16,000 installations in 2013. The annual count later plummeted to 2,000.

“A lot of companies went under and didn’t make it,” Mould said. “It caused installers to go out of business and a lot of people lost their jobs. We’ve been pulling ourselves up off the mat as an industry ever since.”

Mould believes the Inflation Reduction Act will benefit workers looking for long-term, good-paying jobs, homeowners and the state overall. “It’s going to be one of the main drivers of our economy,” he said. “It will promote higher-paying, union jobs, higher-paying green-collar jobs. In an ironic way, these higher (energy) costs are going to help solar offset higher volatility and dirtier fuel.”