Hawaii’s electricity most expensive in the nation, but tax credit extension could help

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HONOLULU (KHON2) — Rooftop solar installations in Hawaii were up 55% in 2020, despite the economic turmoil brought on by the coronavirus pandemic.

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The state still has by far the most expensive electricity in the nation, averaging 28.72 cents per kilowatt hour. That number nearly triples the national average of 10.54, and is 30% higher than the second most expensive state: Alaska.

The costs in Hawaii are mostly due to the state’s reliance on oil, which fuels 72% of electricity production.

According to Hawaii Democratic Senator Brian Schatz, the investment many Hawaii residents have been making in solar is a sign that clean energy is an economic strategy.

“This is an incredibly powerful tool to create economic development, to save people money, to make progress on our state’s renewable energy goals, but also our national and international need to save the planet,” Senator Schatz said.

The current federal 26% federal tax credit on solar projects was led by Schatz. The credits were set to decrease to 20% in 2021 and expire at the end of the year, but an extension, that passed in December of 2020, will keep the tax credits at 26% until 2022.

“It’s a really significant part of the economics when you make your own choice about whether to put solar on your roof. Twenty six percent of the cost is subsidized by the federal government and that really makes all the difference,” Senator Schatz said.

With Democrats controlling Congress and the White House for the next two years, Senator Schatz says extending the tax credit even further is a high priority.

“In order to make a long term commitment to solving the climate crisis, but also to allow businesses and individuals to plan their own solar installations, we need more than (a) two year extension and we’ll be fighting for that over the next six months,” he explained.

With arguments often mounted against federal subsidies for clean energy sources, the federal government spent $66 billion on subsidies for natural gas, crude oil and coal alone in 2016.

“I would be perfectly comfortable if no energy got any subsidy, but the truth is the oil and gas industry is more heavily subsidized than wind and solar,” Senator Schatz said.

Currently, the state of Hawaii also offers a solar tax credit that caps at $5,000 and $2,250 for a solar hot water heater.

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