Is Solar Worth It in Hawaii in 2026?

The 30% federal Investment Tax Credit for residential solar expired on December 31, 2025.^[1] It’s gone. On a $30,000 system, that was $9,000 in tax savings — real money that real families were counting on. We fielded dozens of calls in January from homeowners asking whether they had missed the window on solar entirely.

They hadn’t.

The federal credit mattered, but it was never the primary driver of solar economics in Hawaii. The primary driver has always been the same thing: you pay more for electricity than almost anyone in the developed world. That hasn’t changed. If anything, it has gotten worse. And so the math still works — decisively. This article lays out the numbers, walks through a real project example, and puts the 2026 payback timeline next to the 2025 timeline so you can see exactly what changed and what didn’t.

Why Hawaii Solar Has the Best Economics in the Country

Forget the incentives for a moment. The fundamental reason solar works better in Hawaii than anywhere else is the price of the alternative. HECO’s average residential rate on Oahu hit $0.4054/kWh in Q1 2026.^[2] On Maui, customers are paying $0.48–$0.52/kWh. The national average is $0.17.^[3] That is not a small gap — it is a 2.5× to 3× multiplier that makes every kilowatt-hour your panels produce worth two to three times what it would be worth on the mainland.

A 10 kW system on an Ewa Beach rooftop produces roughly 14,500 kWh per year in Hawaii’s solar resource. At $0.41/kWh, that electricity is worth about $5,945 annually. In Phoenix — which has comparable sunshine — the same system offsets electricity at $0.13/kWh, producing savings of about $1,885. Same panels, same sun, three times the financial return. The federal credit was identical in both states. The rate differential is not.

And rates keep climbing. HECO has averaged 5–6% annual rate increases over the past decade, driven by imported fuel costs, grid infrastructure upgrades, and wildfire mitigation spending.^[2] A family in Mililani Mauka that we worked with last year was paying $480 a month when they called us. They pulled out their bill from 2020 — same house, same usage — and it was $340. That is a 41% increase in five years. Their projected 2030 bill at the same trajectory: over $640 a month. They installed a 10.5 kW system with a Powerwall and now pay $18 a month for their minimum HECO connection fee.

The Incentives That Remain in 2026

The federal residential solar credit expired, but the incentive stack in Hawaii is deeper than most people realize. Here is what is still available and how each one affects your bottom line.

The Hawaii state Renewable Energy Technologies Income Tax Credit covers 35% of installed cost up to $5,000 per system (HRS §235-12.5).^[4] It has no expiration date. For installations over roughly 5 kW, the system can often be structured as two separate systems to capture up to $10,000 in state credits — this is standard industry practice and something your contractor should discuss with you. Unlike the federal credit, this one has survived every legislative session since its creation without modification. We don’t expect that to change.

The federal battery storage ITC is still active at 30% through 2032 for standalone systems of 3 kWh or greater.^[1] This is the piece most homeowners miss. A Tesla Powerwall 3 installed at roughly $14,000 generates about $4,200 in federal tax savings. The battery does not need to be paired with new solar panels — even homeowners adding a battery to an existing system qualify. If you were going to install a battery anyway, and in Hawaii you should be, the federal government is still covering nearly a third of the cost.

HECO’s BYOD+ program pays $400 per kilowatt of dispatch capacity upfront when you enroll your battery in grid services.^[5] For a Powerwall 3 with 11.5 kW capacity, that is roughly $4,600 deposited within weeks of enrollment. Low-to-moderate-income households qualify for an additional $400/kW, doubling the payment. The commitment is five years, and you retain 20% of your battery capacity as backup reserve at all times.

Hawaii Energy’s eHale program is launching new rebate tiers in 2026 for energy-efficient home upgrades, including battery storage paired with load management. Details are still being finalized, but early program documents indicate rebates of $500–$1,500 for qualifying battery installations.^[6] We will update this article as the program firms up.

The City & County of Honolulu exempts the added value of a solar or battery system from property tax assessments. Your home appraises higher — studies show $15,000–$25,000 higher for a typical residential solar system^[7] — but your property tax bill does not increase. On an island where property taxes are already a burden, this is not trivial.

A Real Cost Example: 10 kW System + Powerwall

Here is what an actual 2026 project looks like. This is a 10 kW REC Alpha Pure-R system with a Tesla Powerwall 3, installed on a single-story home in Hawaii Kai. These are representative prices from our recent contracts, not hypothetical estimates.

Line Item	Amount
10 kW solar PV system (REC 430W panels, Enphase IQ8+)	$28,000
Tesla Powerwall 3 with gateway	$14,000
Total gross cost	$42,000
Hawaii state tax credit (35%, two 5 kW systems)	−$10,000
Federal battery ITC (30% of $14,000)	−$4,200
HECO BYOD+ upfront (11.5 kW × $400)	−$4,600
Net cost after incentives	$23,200

Twenty-three thousand dollars for a system that produces roughly $5,900 in annual electricity savings at current rates, with those savings growing every year as HECO rates increase. If eHale rebates materialize at $1,000, the net drops to $22,200.

Payback: 2025 vs. 2026 — The Difference Is Smaller Than You Think

This is the comparison everyone wants to see. Did waiting until 2026 cost you years of payback? The answer is yes — but fewer years than you might expect.

Metric	2025 (with federal credit)	2026 (without)
Gross system cost (10 kW + Powerwall)	$42,000	$42,000
Federal solar ITC (30%)	−$8,400	$0
Federal battery ITC (30%)	−$4,200	−$4,200
Hawaii state credit	−$10,000	−$10,000
BYOD+ upfront	−$4,600	−$4,600
Net cost	$14,800	$23,200
Year 1 electricity savings	$5,600	$5,900
Simple payback	2.6 years	3.9 years
Payback with 5.5% rate escalation	2.4 years	3.6 years

The 2026 payback is roughly 1.2 years longer. That is the real cost of the expired federal credit in Hawaii — not a decade, not five years, about fourteen months of additional payback time. And notice that the 2026 year-one savings figure is actually higher than 2025, because HECO rates increased again in January. The rate escalation partially offsets the lost credit every single year going forward.

Compare that to a homeowner in New Jersey or Texas who lost the federal credit. Their payback extends from 8 years to 12 or 13. In several mainland markets, solar without the federal credit does not pencil at all. In Hawaii, it pencils in under four years. The rate differential does that much work.

The Opportunity Cost of Doing Nothing

We talk a lot about what solar costs. We should talk more about what not going solar costs.

A household in Kapolei using 800 kWh per month — typical for a family of four with central AC — pays approximately $328 a month to HECO at current rates. That is $3,936 per year. At a conservative 5% annual rate increase, here is what that household will pay over the next 25 years if they do absolutely nothing.

Year	Annual HECO Cost	Cumulative Paid
2026	$3,936	$3,936
2031 (Year 5)	$5,023	$22,554
2036 (Year 10)	$6,412	$51,840
2041 (Year 15)	$8,185	$89,632
2046 (Year 20)	$10,447	$137,976
2051 (Year 25)	$13,336	$199,622

Nearly $200,000. Paid to HECO. For electricity you could have produced on your own roof.

A solar-plus-battery system at a net cost of $23,200 eliminates most or all of that bill for 25–30 years. Even accounting for panel degradation (about 0.25% per year with modern panels), inverter replacement around year 15 ($2,000–$3,000 for microinverters), and the $18/month minimum HECO connection fee, the total 25-year cost of ownership for the solar system is roughly $30,000–$33,000. The 25-year cost of doing nothing is $200,000. That is a $167,000 difference.

Put another way: every month you delay going solar, you are writing HECO a check that you will never get back. The system pays for itself in under four years and then generates free electricity for another two decades. There is no other home investment with that return profile.

How Hawaii Compares to the Mainland — Even Without the Federal Credit

Solar companies in Arizona, California, and Florida are genuinely struggling with the expiration of the federal residential ITC. Their customers were already looking at 7–10 year paybacks with the credit.^[8] Without it, the math gets uncomfortable.

Hawaii is a different market entirely. The electricity rate does more heavy lifting here than the tax credit ever did. Consider a side-by-side comparison of identical 10 kW systems installed in three states, all without the federal residential credit.^[3]

Factor	Hawaii	Arizona	New Jersey
Avg. residential rate ($/kWh)	$0.41	$0.13	$0.18
Annual production (kWh)	14,500	16,000	12,500
Year 1 savings	$5,945	$2,080	$2,250
State incentive	$10,000	$1,000	SRECs (~$800/yr)
Net system cost	$23,200	$27,000	$26,000
Payback period	3.9 years	13+ years	9–11 years

Hawaii’s payback without the federal credit is faster than Arizona’s payback was with it. That is the number that should end the “is it still worth it” conversation. The federal credit was a bonus here. On the mainland, it was the engine. Those are fundamentally different situations.

What About Financing?

Not every household has $23,000 in cash. Most of our customers finance, and the math still works — though the margins are tighter than they were in 2025.

A $23,200 loan at 6.5% over 15 years runs about $203 per month.^[9] If your current HECO bill is $350 or more, you are cash-flow positive from month one. Your loan payment is lower than the electric bill it replaces. When the loan is paid off in 2041, the electricity is free for the remaining 10–15 years of the system’s life.

If your HECO bill is under $250, financing gets tighter. In that case, we recommend either a smaller system sized to your actual consumption or a cash purchase if possible. We are not going to tell you financing always makes sense — it depends on your bill size and your rate. That is something the savings calculator can model for your specific situation.

Who Should NOT Go Solar Right Now

Honest analysis means acknowledging when the answer is “not yet.” Solar in 2026 does not make sense for every Hawaii homeowner.

If your roof is more than 15 years old and needs replacement within the next five years, do the roof first. Removing and reinstalling panels costs $3,000–$5,000. If your roof faces north with significant shading from mature monkeypod trees, production may be too low to justify the investment — get a shade analysis before signing anything. If you are planning to sell your home within two years, you may not recoup the full investment at closing, although solar does increase home value in Hawaii. And if your HECO bill is under $100 a month, likely because you live alone in a small unit, the system size needed is so small that the fixed costs of installation erode the economics.

For everyone else — and that is the vast majority of Oahu, Maui, and Big Island homeowners — the math is unambiguous.

Our Take

We have been installing solar in Hawaii since 1993. We installed through the early net metering years, through the NEM cap crisis, through the creation of CGS+ and SRE and BYOD+, and through the IRA boom that gave the industry four of its best years. We have seen incentives come and go.

Here is what has never changed: Hawaii electricity rates are high enough that solar pays for itself regardless of what Washington does. The federal credit made a good deal better. Its expiration makes the deal slightly less good. It does not make it a bad deal. It does not make it a close call. A 3.9-year payback with 20+ years of free electricity afterward is still the best return on investment available to a Hawaii homeowner, period.

We recommend going solar in 2026 if your roof is in good condition, your HECO bill is $200 or more per month, and you plan to stay in your home for at least five years. Add a battery — the federal credit, BYOD+ payment, and backup power make it a straightforward decision. Waiting another year does not improve the economics. HECO rates will be higher. Equipment prices may rise with new tariffs. The state credit has no expiration, but that does not mean it will last forever.

The window is open. The math works. Act on it.