Residents with rooftop solar are likely familiar with Hawaiʻi’s renewable tax energy credit, which offers individuals who install eligible solar systems a sizable income tax break — either 35% of the system’s cost or $5,000, whichever is less.

Solar experts say that incentives play an important role in encouraging people to install rooftop solar panels, which in turn help the state transition away from fossil fuels.

“It’s kind of a fundamental pillar of Hawaiʻi’s renewable energy policies,” said Rocky Mould, the executive director of the Hawaiʻi Solar Energy Association.

That incentive could be going away. State lawmakers have introduced measures this session to roll back the renewable energy credit, along with other income tax credits.

The first is House Bill 1369, proposed by House Finance Chair Kyle Yamashita. The original language of that bill repealed the renewable energy credit outright.

“It was alarming to see that in there,” Mould said. “It’s Hawaiʻi’s policy to achieve 100% renewable energy on its electric grid by 2045, so an immediate repeal today of that solar tax credit would have made it really difficult, if not impossible, to achieve that kind of goal.”

Yamashita struck that language from the bill during a Finance Committee hearing after opposition from the solar industry as well as state agencies like the State Energy Office and the Hawaiʻi Green Infrastructure Authority.

But he let the industry know that wasn’t his final say on the matter.

“At some point in time, I have asked the solar industry in particular, every market as it matures, there has to be an exit to subsidy,” he said. “Nobody’s been able to give me the answer to that question. When is it time? Because if you don’t exit, then there is market distortion.”

Mould said the industry is open to a conversation about how to sunset the renewable energy credit. He suggested it might be phased out as the state reaches its deadlines for its renewable portfolio standard.

“When we’ve achieved our renewable energy goals, or 2045, whichever comes sooner, we can take our foot off the gas a little bit,” he said.

But lawmakers may have a different timeline in mind. Another measure, House Bill 796, would require that state income tax credits end in five years or be reduced by one-third annually.

Mould thinks that deadline would hit the solar industry like a “sledgehammer.”

“Having this five-year cliff out there looming is going to have immediate impacts on our outlook,” he said.

Yamashita proposed HB796 as well. Initially, it only applied to new or renewed credits, but was expanded to include all existing state income tax credits with only a few exceptions.

Yamashita did not respond to a request for comment on the measures.

The conversation about how to handle solar incentives locally is taking place against the backdrop of rising costs due to tariffs and increasing uncertainty around federal support for clean energy.

“It really feels like fighting a war on two fronts,” said Will Giese, the senior director of government affairs for the Hawaiʻi-based Solaray Corporation.

Giese said tariffs are significantly impacting prices for his business. He is also concerned that the Republican-led effort to shrink the national budget will put other solar tax credits on the chopping block.

As local solar companies navigate murky waters, Giese hopes they can count on the state’s support.

“Things like tariffs, things like what happens on the hill, regulatory rollbacks, interest rates, all those things that Hawaiʻi cannot control impact our business, but things that Hawaiʻi can control also impact our business,” he said.

“It would be nice to get a break from somebody somewhere.”

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