The solar industry says nearly half a billion dollars of investments in solar projects across Hawaiʻi are in jeopardy after state lawmakers voted to phase out the renewable energy tax credit.
The state Renewable Energy Technologies Income Tax Credit helps to finance new residential and commercial solar systems.
Senate Bill 3125 eliminates the RETITC in 2031, but changes to the incentive start before that. Moving forward, the state would cap spending on the credit at $40 million each year, which is less than half of what the state has spent on the credit in recent years. That cap goes into effect in 2027, meaning that projects that are already underway this year are suddenly in competition for a smaller pot of state funding.
Rocky Mould, the executive director of the Hawaiʻi Solar Energy Association, said he’s been hearing from solar developers who are worried that they may have to cancel or refinance their current projects due to the uncertainty about the amount of state support those projects might receive. “We're looking at $460 million of investment just this year that are at risk,” Mould said.
Ted Peck is the president of the solar company Holu Hou Energy, which primarily develops systems for low and middle income residents living in multi-dwelling units. Peck said he has seven projects that would be affected by retroactive changes to the credit.
“I literally, on Friday, had an investor in a project tell me he was out as the Legislature was signing off on this bill,” he said.
This repeal of the state-level tax credit comes as the solar industry reels from the recent rollback of federal incentives for renewable energy projects.
Congress eliminated a federal tax credit for residential solar at the start of this year. Rising Sun Solar CEO Matias Besasso said demand for household solar systems has since fallen off a cliff. “We were probably doing six to eight installations a week last year. We are doing about two installations a week this year,” he said. Besasso said revenue for his business has decreased by 65%. As a result, he's had to lay off five members of his staff, some of whom have been with his company for a decade.“It's all in an effort to keep the business that I have employing the people that I can employ given the new environment,” he said.
Commercial solar installers have until July to break ground on new projects to ensure they qualify for remaining federal tax credits.
If financing falls through for those projects at this point as a result of changes to the state tax credit, Mould said developers may miss that deadline.
The Hawaiʻi Solar Energy Association wants lawmakers to convene a special legislative session to clarify the language in SB3125 and create safe harbor provisions for projects in development this year.
A special session can either be called by the governor or by a two-thirds vote of lawmakers in the chambers seeking to reconvene.
HPR reached out to the offices of the House speaker, the Senate president, and the chairs of each chamber's finance committees to see if there was support for reconvening to address the solar industry’s concerns. As of Thursday morning, HPR had not received a response.
State Rep. Nicole Lowen, who chairs the House Energy and Environmental Protection committee, raised concerns about how changes to the renewable energy tax credit may affect the solar industry during a floor vote for the bill last Friday. “This bill provides no safe harbor protections for projects already underway, and some projects that were financially viable just a few weeks ago now may have to shut down,” she said.Lowen told HPR she thinks that a special session is appropriate, and that time is of the essence to clarify financing for commercial projects trying to break ground by July.“It really is urgent that we do something as soon as possible,” she said.
Gov. Josh Green could also veto SB 3125. Green passed an executive order in 2025 calling for 50,000 new rooftop solar systems by 2030. Last year, he vetoed another measure that
would have sunset the renewable energy tax credit, noting its importance to the economy. But the governor is in a trickier position this year. The language about the credit is part of a much larger bill that preserves income tax cuts for Hawaiʻi households. He can’t veto one without vetoing the other. Gov. Josh Green recently praised the work of lawmakers on SB 3125 on Hawaiʻi News Now. HPR asked the governor’s office to comment on whether he would support a special session or would consider vetoing SB 3125. In response, the office stated that “the Governor remains committed to Hawaiʻi’s clean energy transition and lowering energy costs for local families,” but did not offer specifics on Green’s next move.
Rocky Mould said the Hawaiʻi State Energy Office may push for a veto of the bill if a special session is not convened. “We're reaching out to allies and legislators and the executive to try to figure something out and create a viable path forward,” he said.
Josh Mason, the owner of the solar company Blue Sky Energy on Hawaiʻi Island, said that the renewable energy tax credit isn’t perfect. He believes it could be better designed to meet the needs of residents and local businesses while promoting the state’s clean energy goals. But Mason added that such abrupt changes to state support for solar amid ongoing rollbacks in federal incentives could “cripple” the industry.“The retroactive language and the $40 million cap are very problematic for an industry that's already in turmoil, and it's only going to create more panic, which is not going to be beneficial for anybody,” he said.
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