Tax breaks and rebates brighten solar-heating sales
HAIKU, Maui » Despite living in rainy rural Haiku, Ken Moscow has no doubt about the savings he will get from installing a solar-powered hot water system.
"The technology has advanced," said Moscow, who had been shopping for a solar water-heating system for a year. "Solar panels are producing a lot more at lower sun levels."
With oil prices and electricity also reaching higher levels, Hawaii residents are beginning to buy or at least seriously consider joining an estimated 70,000 households with solar water-heating systems statewide.
"We're doing a lot more installations," said Paul Spencer, president of Sun King Inc., with offices on Kauai, Maui and Oahu. "The spike has just begun in the last 60 days."
Kane Coyle, operations manager for Allen's Plumbing, which has offices on Maui, Oahu and the Big Island, said the number of people who want to put in a solar-powered water-heating system has increased in the last two months.
"It just economically makes sense for people in regards to tax credits and co-payments from utility companies," Coyle said.
Solar energy advocates point out that the purchase of a system by the end of this year enables a buyer to claim a 35 percent tax credit from the state.
Hawaiian Electric Co. also offers a $750 residential rebate for its Oahu customers, and its related firms, a $1,000 residential rebate on Maui and the Big Island.
Kauai Island Utility Cooperative offers a $800 rebate to qualified residential customers.
In addition, starting Jan. 1, the federal government will be offering a 30 percent tax credit on residential solar-water heating systems up to $2,000.
Industry executives said in Hawaii the price of a solar-powered hot-water system ranges from about $4,000 to $7,000, and the average savings on household electricity is about 30 percent to 50 percent, depending on the size of the family and household consumption.
Richard Reed, president of the Hawaii Solar Energy Association, said his members have had steady business for the past 10 years, in part because of the state's 35 percent tax credit on solar-powered hot-water systems.
Reed said in the last 15 years, solar water heating has become less expensive and more efficient and reliable.
"There's been a lot of changes," he said. "A lot of people are taking a hard look at the electric side of their home usage."
Industry officials said HECO has also been helpful through providing a $750 rebate under its residential solar water-heating systems program.
The public utility issues the rebate to solar-powered water-heating system purchasers whose contractors meet its certification requirements, including the possession of a contractor's license and insurance.
Ron Richmond, a Hawaiian Electric program analyst, said the utility benefits by being able to put off building more generators to provide electricity and by encouraging the licensed and insured installation of the equipment.
While solar energy businesses are grateful for the rebates and tax credits, they are also mindful that the support could disappear.
Following the Arab oil increases of the early 1980s, the federal government granted a 40 percent tax credit and the state a 10 percent tax credit for solar water-heating systems.
When the Reagan administration declined to push for its continuation, the federal tax credit expired by 1985, and solar-water heating installations in Hawaii went from 6,700 in 1985 to 600 in 1986, Richmond said.
"So it was about a 90 percent loss of business, and about 90 percent of the solar businesses closed down," Richmond said. "It was that way not only in Hawaii, but nationwide."
By the mid-1990s the state increased the tax credit to 35 percent.
With the addition of the utilities' rebate programs, the number of installations statewide has climbed to more than 3,000 annually, Richmond said.
Richmond said the installation of solar water-heating systems is also on the upswing in new developments.
He said on Oahu, Gentry Homes has become the first major developer to include solar-powered water heaters in new homes.