Residents of Hawaii pay the highest energy costs in the whole nation. Hawaiians don’t use much electricity, but the rates are incredibly high. Due to these energy costs, Hawaiians are looking for better ways to save money on their electricity costs.
One way is to invest in solar energy. As the years go on, solar energy is becoming more economically viable. For example, the cost of solar panel installations has dropped by as much as 20% in the last five years alone.
In stark contrast, energy costs increase by as much as 3% annually. So solar panels can be good long-term investments to help you save money.
Therefore, you probably want to know how much solar panels in Hawaii will cost to install. That said, the initial installation cost is not the only factor to consider. In fact, the more important factor is the payback period.
Solar panels will eventually pay for themselves, but how long will it take for you to break even on your investment? We will discuss the average cost of solar panels in Hawaii; however, the main goal is to determine how long it will take to pay for themselves. So let’s gather all the most important figures to calculate our payback period.
The Average Cost of Solar Panels in Hawaii
The good news for residents of Hawaii is that the cost of solar panels is comparatively cheap. The average price of solar panels in the US is $3 per watt installed. However, the average cost of solar panels in Hawaii is just $2.67 per watt installed.
You also need to consider that a bulk pricing scale applies to solar panel installations. This means that the larger the system, the cheaper it is on a per watt basis. However, if we look at it on a per watt basis, the larger systems are, the more cost-effective. So, what is the average cost of solar panels in Hawaii?
- 4kW – $2.91 per watt – $11,640
- 5kW – $2.79 per watt – $13,950
- 6kW – $2.67 per watt – $16,020
- 7kW – $2.64 per watt – $18,480
- 8kW – $2.68 per watt – $21,440
- 9kw – $2.59 per watt – $23,310
- 10kW – $2.56 per watt – $25,600
The Federal Solar Rebate Program
The initial costs are high, but incentives and rebates are available for Hawaiians. One of these incentives is the Federal Solar Rebate Program, also known as the ITC or Investment Tax Credit. At this time, this rebate sits at 26%.
This means that you pay only 74% of the upfront cost of your solar panel investment. The bad news is that this rebate will drop to just 22% at the end of 2022.
Then, at the end of 2023, it drops to nothing. At this time, there does not seem to be a plan to renew this rebate. Therefore, to get the best deal, time is of the essence. So, what do solar panel costs look like once this ITC has been applied?
- 4kW – $8,613.60
- 5kW – $10,323
- 6kW – $11,854.80
- 7kW – $13,675.20
- 8kW – $15,865.60
- 9kW – $17,249.40
- 10kW – $18,944
The Hawaii Renewable Energy Technologies Income Tax Credit
The good news for Hawaiians is that there is a state-sanctioned credit program in place. This program provides a 35% state solar tax credit. The maximum deduction is $5,000.
Keep in mind that this applies to the initial cost of the solar panels, not including the ITC listed above. So, what do solar panel installations in Hawaii cost after all rebates have been applied?
- 4kW – $4,539
- 5kW – $5,440.5
- 6kW – $6,854.80
- 7kW – $8,675.20
- 8kW – $10,865.60
- 9kW – $12,249.40
- 10kW – $13,944
On a side note, there is a property tax exemption for residents of Honolulu. This means that your solar panel system’s added value will not increase property taxes.
Hawaii Solar Panel Payback Period
We have determined the most important figure. However, our primary goal is to determine how long it will take for you to break even on your investment.
Therefore, we also need to determine how much energy you use in Hawaii and how much it costs. Then, we also need to figure out how much electricity solar panels in Hawaii can produce based on peak sunlight hours.
Residential Energy Usage and Costs in Hawaii
Hawaiians use just 544-kilowatt hours per month, which ranks 50th in the US. Hawaii comes in at nearly 40% under the national average of 903-kilowatt hours per month.
However, electricity rates in Hawaii are the highest in the nation. Hawaiians pay an average of 37.34 cents per kWh used. This is 215% greater than the national average of 11.88 cents per kWh.
This leads to astronomically high electricity costs. For example, the average electricity bill in Hawaii is $203 per month or $2,436 per year.
This is nearly 90% more than the national average monthly electricity cost of $107. Due to these high costs, solar power is a viable investment in Hawaii.
Peak Sunlight in Hawaii – How Much Electricity do Solar Panels Produce?
The average solar panel installation size is 5 kW, so this is what we will work with here. Moreover, the standard amount of peak sunlight hours used for output calculations is 4 hours.
A standard 5kW solar system can produce 20-kilowatt hours of electricity per day with four hours of peak sunlight. This equates to 600-kilowatt hours of electricity produced per month.
However, Hawaii is a very sunny place, on average, getting 6 hours of peak sunlight per day. That’s 50% more than is used in the standard solar panel output calculation.
Therefore, in Hawaii, you can expect a 5kW system to produce 30-kilowatt hours per day. This equates to an output of 900-kilowatt hours per month.
Based on this, a 4kW system would be enough to fully meet the energy usage. A 4-kilowatt solar system would produce 24-kilowatt hours of electricity per day. This equates to 720-kilowatt hours produced per month, still more electricity than the average Hawaiian uses.
The Solar Panel Payback Period in Hawaii
Since a 4kW system is enough to meet the needs of Hawaiians, this is what we will be working with.
Remember, we’re figuring out how long it takes for solar panels to pay for themselves. There are four important figures needed to perform this calculation:
- Hawaiians use 544-kilowatt hours of electricity per month.
- Annually, Hawaiians pay $2,436 for their electricity.
- A 4kW solar system in Hawaii costs $4,539.
- That 4kW solar system can produce 720-kilowatt hours of electricity per month.
A 4kW solar system completely meets the usage needs of Hawaiians. Therefore, this would allow you to save 100% of your annual energy bill.
In other words, a 4kW solar system will allow you to save $2,436 per year. Based on this, it will take just 1.86 years for you to break even on your solar panel investment. This is one of the, if not the fastest, payback periods for solar panels in the US.
Cost of Solar Panels in Hawaii
Fantastic incentives, lots of sunlight, and high electricity costs make solar an excellent investment for Hawaiians.