Hawaii Solar Policy and Legislation Updates: What Changed in 2026

Hawaii Solar Policy and Legislation Updates: What Changed in 2026

Hawaii solar policy changed more in 2026 than in any year since net metering closed. Act 24 restructured the state tax credit, the governor issued an executive order to protect systems installed this year, the federal residential solar credit ended, and Hawaiian Electric kept adjusting its battery programs. If you're weighing solar, a battery, or both for your home or building, these changes affect how a system should be designed and when it makes sense to install it.

Our team has installed solar in Hawaii since 1993, and we've seen incentives come and go more than once. This page explains the current Hawaii solar legislation and utility rules in plain language, so you can make decisions with your own property, HECO account, and goals in mind. It is not tax advice. Credit eligibility depends on your circumstances, and Hawaii's rules are still being worked out, so please check any tax questions with a qualified tax professional.

2026 Hawaii Solar Policy Changes at a Glance

Why Solar Policy Matters for Hawaii Homeowners

Hawaii has some of the highest electricity rates in the country, a state goal of 100 percent renewable electricity by 2045, and one of the highest rates of rooftop solar per household. Because of that, policy decisions at three levels affect your project directly:

• State legislation sets the Hawaii tax credit and permitting rules.
• Federal law sets national tax credits and the equipment sourcing rules that come with them.
• Utility regulation, through Hawaiian Electric and the Public Utilities Commission, decides how you're credited for what your system sends to the grid.

A change at any one level can change the right system size, whether a battery makes sense, and when to install. None of it changes your roof, your usage, or your electric bill, which is why we always start there.

Hawaii State Solar Tax Credit: Act 24 (SB3125)

For years, Hawaii's Renewable Energy Technologies Income Tax Credit helped cover part of the cost of rooftop solar, alongside the federal credit. In the 2026 session, lawmakers passed SB3125 as part of a broader income tax package, and Governor Green signed it as Act 24 on May 21, 2026.

According to the Governor's office and the Hawaiʻi State Energy Office, Act 24:

• Caps total credits statewide at site-specificillion per year, starting with tax year 2027.
• Adds new eligibility requirements and certification provisions for claiming the credit. The state has said detailed guidance and filing instructions will follow.
• Sets a sunset, with the credit scheduled to end after 2030.

Because the cap is statewide, a credit that used to be a set percentage for every eligible system may now depend on how much of the annual pool is left and how the state administers it. Until that guidance is published, the practical details of claiming the credit in 2027 and later remain open. For a closer look at the bill and how it affects project planning, see our detailed breakdown of Act 24 and SB3125.

Executive Order 26-02: Protection for 2026 Systems

As first written, Act 24 also applied to 2026. That worried families and businesses that had already signed contracts or started projects. On June 12, 2026, Governor Green issued Executive Order 26-02. It exempts systems placed in service in 2026 from the site-specificillion cap if the taxpayer can show they were counting on the credit when they made the investment decision before May 21, 2026.

In practice, keep your signed agreement, deposit records, permit dates, and installation paperwork together. A tax professional may ask for them to support a 2026 claim.

What to Watch in the 2027 Legislative Session

State energy officials said the executive order gives the industry time to design new proposals for the 2027 session. Earlier 2026 bills proposed removing the per-system residential cap while limiting the credit by income, and a separate bill proposed ending the credit after 2030. Expect the tax credit to come up again. Our team follows these bills and will update this page as rules are finalized. Until the law and state guidance say otherwise, treat any 2027 eligibility as unsettled.

Federal Solar Policy Updates

The federal budget law signed July 4, 2025 changed the clean energy credits that Hawaii homeowners and businesses relied on.

Residential Clean Energy Credit (25D)

The federal residential credit for homeowner-owned solar, batteries, and solar water heating ended for expenditures made after December 31, 2025. The IRS counts an expenditure as made when installation is complete. That means a system finished in 2026 generally does not qualify, even if it was contracted earlier. If you installed in 2025, talk with your tax preparer about how to claim it.

Commercial and Third-Party Systems (48E)

The technology-neutral commercial credit is still available for solar, but on a shorter timeline. Projects had to begin construction by July 4, 2026, or must be placed in service by December 31, 2027. Energy storage phases down on a longer schedule than solar. New rules also limit credits for projects that use components from certain foreign entities, which affects equipment choices. For leased and other third-party-owned home systems, the system owner claims this commercial credit. If you're considering a lease or power purchase agreement, ask the provider how these deadlines affect their offer.

Federal rules are complex, and the IRS is still issuing guidance. A qualified tax professional can confirm what applies to your situation.

HECO Solar Programs and Utility Regulations

Hawaiian Electric's original Net Energy Metering program closed to new customers years ago. Today, how you're credited for solar depends on the program your system is enrolled in. To compare the options side by side, read our guide to HECO's rooftop solar programs.

• Smart DER tariff (export and non-export options): the current path for most new systems. Export credits vary by time of day.
• Bring Your Own Device (BYOD) Plus: pays an upfront incentive and a monthly credit for new batteries that send stored energy to the grid during a two-hour window you choose each day. It requires a five-year commitment, and leaving early can mean repaying part of the incentive.
• Legacy programs: Customer Grid Supply Plus, Smart Export, and NEM customers keep their arrangements. Adding equipment can affect eligibility, so check before you expand a system.
• Battery Bonus: closed to new participants and replaced by BYOD Plus.

HECO sets incentive rates and enrollment capacity for each island, and both can change. Our 2026 BYOD Plus enrollment guide covers equipment requirements and what to check before you sign up.

Time-of-Use Rates and Why Batteries Matter More

Solar you export during the day is now credited at less than what you pay for power in the evening. So more of solar's value in Hawaii comes from using your own power when rates are highest. A battery lets you store midday production for the evening, keep essential circuits running during an outage, and in some cases join grid programs. As a Tesla Premier Installer, our team designs solar-plus-battery systems, including Tesla Powerwall, around how your household actually uses power.

Permitting and Interconnection on Oʻahu

Policy isn't only about credits. On Oʻahu, residential solar permits are filed through the City and County of Honolulu's HNL Build system, and many rooftop systems qualify for Solar Quick Permits. Interconnection with Hawaiian Electric is a separate approval. Your system shouldn't be turned on until both are complete.

In 2026, lawmakers considered letting licensed professionals self-certify code-compliant rooftop solar to speed up permits. That bill stalled in committee and did not become law this year. Other proposals aimed at clearer interconnection timelines and stronger consumer protections for third-party solar sellers were also introduced, and we expect ideas like these to come back in future sessions. For now, the permit and interconnection process works the way it has.

Roof condition matters here too. Panels usually stay in place for decades, so if your roof is near the end of its life, it's usually worth replacing it first. Our in-house crews handle roof replacement ahead of a solar install, so the two projects can be planned together.

How Solar Policy Shapes System Design

Efficiency upgrades matter too. Solar water heating and high-efficiency ductless air conditioning lower the load your solar has to cover, which can change the size of system you need.

What These Changes Mean for Oʻahu Commercial Properties

Small and mid-size commercial owners face a tighter federal timeline than homeowners. Solar projects that didn't begin construction by July 4, 2026 must be placed in service by December 31, 2027 to claim the commercial credit. The state credit's annual cap applies to business claims as well. Storage has more time. If you own a building on Oʻahu, schedule a site review early, so roof, electrical service, and interconnection questions don't push the project past a deadline.

Practical Steps for Navigating Solar Policy Changes

• Start with your bills. Twelve months of HECO usage tells us more than any incentive does.
• Check your roof. Age, material, and condition affect both permitting and long-term cost.
• Get program details in writing. Confirm which HECO program your system will enroll in and what it requires.
• Treat credits as a bonus, not a certainty. Plan so the project still makes sense to you if a credit is reduced or delayed.
• Keep your paperwork. Contracts, permits, and in-service dates may matter for a state credit claim.
• Talk to a tax professional before counting on any federal or state credit.
• Review financing options, such as the solar and battery financing through local lenders we work with.

Should You Wait for Hawaii Solar Policy to Settle?

There's no single right answer. Some homeowners go ahead because high electric bills and outage concerns matter more to them than incentive uncertainty. Others would rather wait for 2027 guidance. Either choice can be reasonable. Whichever way you lean, we suggest a site-specific assessment so you know your roof, your electrical panel, and your options before the rules change again. Pricing and results depend on each property, so we don't quote savings without looking at yours.

How Our Team Helps You Navigate Solar Policy

Alternate Energy Hawaii is locally owned, has worked on Hawaii homes since 1993, and has installed more than 59 MW of solar. Our in-house crews handle photovoltaic and battery systems, solar water heating, Mitsubishi ductless AC, roofing, electrical work, and EV chargers, plus monitoring and maintenance after the install. Learn more about our experience installing solar across Hawaii, or request a free solar estimate and our team will walk you through how the current rules apply to your home.

Frequently Asked Questions About Hawaii Solar Policy

Did Hawaii eliminate the solar tax credit?

No. Act 24 keeps the Renewable Energy Technologies Income Tax Credit, but it adds a site-specificillion statewide annual cap starting in 2027, new eligibility and certification requirements, and a sunset after 2030. Executive Order 26-02 exempts qualifying 2026 systems from the cap.

Is the 30 percent federal solar tax credit still available for homeowners?

No. The federal residential credit ended for expenditures after December 31, 2025. Commercial and third-party-owned systems may still qualify under a separate credit with its own deadlines. Check the details with a tax professional.

Can I still join net metering in Hawaii?

No. NEM is closed to new customers. New systems enroll in current HECO programs, such as the Smart DER tariff, and can add a battery through BYOD Plus.

What is BYOD Plus?

It's a Hawaiian Electric program that pays customers who add a new battery and agree to send stored energy to the grid during a daily two-hour window. It requires a five-year commitment, and each island has a capacity limit.

How long does solar permitting take on Oʻahu?

It depends on the system, whether it qualifies for a Solar Quick Permit through HNL Build, and current workloads at the city and at Hawaiian Electric. Utility interconnection is a separate step from the building permit. Our team handles both and will give you a realistic timeline for your project during your estimate.

Where can I find the latest rules for the state credit?

The Hawaiʻi State Energy Office and the Department of Taxation will post guidance as it's developed. You can also review our overview of Hawaii solar tax credits and incentives.