It has been a tumultuous time for the solar industry in Hawaii following recent changes at both the federal and state level.

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It has been a tumultuous time for the solar industry in Hawaii following recent changes at both the federal and state level.

Gov. Josh Green signed a bill into law in May to effectively end tax credits for solar installations by 2030, and significantly reduce and cap them in the meantime. He partially walked back the move this month, signing an executive order to preserve promised credits for solar projects for this year, following pushback from industry leaders.

The back and forth, combined with the rollback of federal renewable energy incentives, has resulted in uncertainty and concern for solar energy providers across the state and local companies on Hawaii Island, including Honoka‘a-based Renewable Energy Services.

“We’ve been in business here on the Big Island for coming up on 35 years, so we’re used to seeing a lot of ups and downs in our industry,” said RES President Roland Shackelford. “But getting the loss of the federal tax credit this year, and then the state tax credit right after… was just really unfortunate, and a big surprise to our industry.”

He said the company’s business had already noticeably decreased following the federal cuts, and customers expressed concern about moving forward with projects amid the changes at the state level.

“We already had about a 30% drop just from the loss of the federal tax credit, and we’ve seen that even increase now. In our conversations with homeowners, it creates this thing of, ‘well, maybe I’ll wait’ … and so it just creates a downtime in the industry where people aren’t ready to move forward,” he said.

Shackelford said he expects the impacts to reverberate throughout the local and state economy.

“We run a family-owned and operated business here in Honoka‘a that provides high-quality jobs to 23 individuals, and with the loss of this tax credit, they’re putting their jobs in jeopardy, as well as providing those economic and security benefits to the rest of the island,” he said. “It’s unfortunate. It’s moving in the wrong direction for our state here in Hawaii.”

The state’s renewable energy solar incentives previously covered up to 35% of costs for eligible projects. The recent cuts to this tax credit were part of Act 24, which also included other measures aimed at preserving tax relief for middle- to low-income households following a projected nearly $3 billion state revenue shortfall.

Shackelford, who is also a board member for the Hawaii Solar Energy Association, feels this is part of the reason the bill passed and was signed into law by the governor, and why efforts to stop it were not successful.

“On the HSEA side and on the business side, trying to write to our different legislators, asking for them to say no to this, their response was that they couldn’t, because it was coupled with so many other things,” he said. “I think that’s the incorrect political way of going through things … that we can’t say no to something bad because it’s coupled with other good.”

Marco Mangelsdorf of ProVision Solar, another Big Island-based solar company, echoed this assessment.

While he said the governor’s executive order undid what he viewed as the most egregious element of Act 24 — the retroactive nature of the cuts, which would have applied to projects already underway — he does not think it is sufficient.

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“The order fixes what was a stunning flaw in the bill that generated great uncertainty for those who had committed to going solar prior to Act 24 going into law,” Mangelsdorf wrote in a statement to the Tribune-Herald.

Green’s executive order also states that solar systems installed in 2026 shall not be subject to a $40 million aggregate cap on allowable tax credits created by the law.

“So, no cap this year, which consumers and we in the solar industry can be grateful for,” Mangelsdorf wrote. “That said, a lot of work needs to be done to try and fix the rest of Act 24 in the next state legislative session in 2027.”

While he said he is confident in his business’ ability to weather the changes, he is concerned about the impact of the legislation on solar and renewable energy across the state more broadly.

“I’d be lying if I said I wasn’t nervous about the state of affairs now, and how things are going to develop for the industry as a whole…” he said. “We have to do the best we can as an industry with the cards that we’ve been dealt now, first by the feds and now by the state.”

Noel Morin, board chair of Sustainable Energy Hawaii, said that ideally, as the solar industry develops, there will come a time when tax incentives are no longer needed. But, for now, he views them as a necessary bridge to help transition to renewable energy.

“At some point in time, once there is adequate adoption of the technology, and especially given the cost of renewable energy solutions dropping, we wouldn’t have to rely on incentives. But until that time, it does serve a purpose, and that is to enable the adoption of clean energy solutions,” he said. “We eventually will see that the program needs to sunset, but the way they (lawmakers) are going about it is unfortunately going to create a lot of near-term economic and maybe even job issues.”

Additionally, he said, incentivizing solar energy installations provides economic benefits to the state.

“The thing that is really unfortunate is that the reality of it is, it’s not necessarily a subsidy, it’s an investment that actually returns more than the taxpayers pay out in terms of the revenue from the tax base — all the economic activity associated with building solar energy systems,” he said.

Hawaii has set a mandate to generate 100% of the state’s energy from renewable sources by 2045. Currently, the state is among the most reliant in the country on fossil fuels, with over 60% of electricity generation being powered by petroleum.

However, Morin is still hopeful that this goal is possible, even with the recent changes.

“I think it will create some drag, I think it will create some challenges, but I think we’ll find a way around it,” he said. “I think that there’s going to be some realization that there are more affordable ways to support the economy through renewable energy, and we’ll figure something out.”

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Email Grace Inez Adams at [email protected].