EDITORIAL: Good trade-off for solar tax credit - The Garden Island

Hawaii has been on the path toward adoption of solar energy for years, and despite some national policy shakeups, it’s gratifying to see the state basically staying the course. Congressional action has reduced allowances nationally through various cutbacks, including federal subsidies for solar installations. That has meant cutbacks at the state level in a range of categories, with the need to save essential services, such as nutritional support and healthcare, noted by the state administration as particular concerns. Act 24, which Gov. Josh Green has signed, curbed how much tax credits the state can afford to provide for rooftop photovoltaic panels, in order for the state’s budget to balance. But on Friday the governor signed an executive order to stave off any changes for this year, in an effort to preserve the tax benefits for most projects that were under contract under the previous tax credit guidelines. This order “protects investment decisions made in the past few months and addresses concerns expressed by Hawaii’s solar industry while respecting the legislative changes for 2027 and beyond,” according to a statement from the executive office. Specifically, Executive Order 26-02 would ensure that rooftop solar systems placed in service this calendar year would not be affected by the $40 million aggregate cap on allowable credits that Act 24 imposed. Taxpayers would have to demonstrate that they relied on the ability to claim the credits when investing. This represents a reasonable accommodation, preventing what would be an unnecessary upending of many households that had pursued the tax credit in good faith and the businesses lined up to take those jobs. At the same time it recognizes that the immediate future of the state’s fiscal planning is uncertain, especially given anticipated further federal cuts under the Trump administration. The state’s own approach must conserve revenue where it reasonably can. The measure retroactively revoked the tax credit eligibility for those with incomes of more than $175,000 for individual filers and $350,000 for joint filers. Those changes rightly remain in effect; the priority should be helping lower-income households save on their electric bills. The industry had objected strenuously in hearings before the Legislature on what was known as Senate Bill 3125, which made changes and deletions to the roster of the state’s tax credits. The one at issue to the solar energy sector is the Renewable Energy Technologies Income Tax Credit (RETITC). The Hawaii Solar Energy Association said in its testimony that the credit “has been one of the State’s most effective policies enabling households and businesses to invest in rooftop solar and energy storage.” On May 7, representatives of rooftop solar companies rallied outside the state Capitol against the bill. The Hawaii State Energy Office, in addition, testified against abrupt changes and asserted that the RETITC is among the provisions “critical to achieve Hawaii’s clean energy goals.” The credit is also the most expensive among those on the chopping block. The RETITC has led to the distribution of more than $684 million in the 79,711 claims over the past decade. In 2023 alone, the credit disbursed more than $100 million to about 11,000 claimants. So this benefit certainly can’t last forever. And in fact, Act 24 still will sunset the program entirely by January 2031. Between now and then the state must continue working with the utilities and the renewable energy industry to advance the clean energy goals. Allowing for a bit of breathing room, though, was the right impulse.