Energy tax credit likely to be renewed
• HECO-approved contractors
• Alternative energy devices
• Penciling out cost of solar water systems
By Jan TenBruggencate
Advertiser Science Writer
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| Paul Otto of Alternative Energy runs copper pipe from solar panels on the roof of Terri Downey's home in Pointe at Royal Kunia subdivision. Studies show solar water heaters, in particular, pay for themselves quickly.
Gregory Yamamoto • The Honolulu Advertiser |
Still unclear is whether the credits will remain generous, and whether fossil fuel-fired power systems, such as heat pumps and ice storage units, will get treatment as favorable as renewable solar and wind systems.
Given the state's budget constraints and closer scrutiny of tax credits, there's enough reason to move ahead quickly if you are on the bubble. The credits aren't likely to disappear, since there seems to be broad support for energy initiatives in the Legislature, state administration and community, according to state Sen. Kalani English,
D-6th (E. Maui, Moloka'i, Lana'i), chairman of the Senate Energy and Environment Committee. The issue seems to be whether the state should be granting tax credits during a period of fiscal drought.
Rep. Mina Morita, D-14th (Kapa'a to Hanalei), who chairs the House Energy and Environmental Protection Committee, said high oil prices clearly are adding to the case for alternative energy solutions.
"Look at the money that's being drained out of our state, with oil at more than $30 a barrel and getting close to $40 a barrel," Morita said.
Two Senate bills extending credits have crossed over to the House, and one House bill has gone to the Senate for consideration.
Alternative energy supporters have the backing of the state Energy Efficiency Policy Task Force convened by former Gov. Ben Cayetano. After spending two years and more than three dozen meetings reviewing the state's energy picture, the task force concluded that the state should put its muscle behind renewable energy technologies, notably solar and wind.
"I think we have an opportunity to kind of do it right," said Rick Reed, president of Inter-Island Solar Supply, the state's largest supplier of alternative energy systems.
One of the biggest-bang-for-the-buck technologies is solar water heating. These systems pay for themselves quickly and reduce the state's use of fossil fuelibased electricity. In an average household, switching from electric to solar water heating can cut electricity use immediately by half.
Hawaiian Electric Co., which provides power to all the major islands except Kaua'i, estimates that 30 percent of single-family houses on O'ahu, Maui and the Big Island have solar water heaters. Kauai Island Utility Co-op officials say 35 percent of Kaua'i houses have them.
It's a mystery why more houses don't. "With the tax credits and rebates, this is the deal of the century" for consumers, said Reed.
The Public Utilities Commission has mandated programs on all islands that provide rebates to many homeowners when they install solar water heaters. To encourage alternative energy use, the state provides a 35 percent tax credit against the cost of the system after the utility rebate.
It is that tax credit, scheduled to expire June 30 unless renewed, that is generating debate in the Legislature. State officials wonder about tax credits that can cost the state more than $1,000 per unit. The annual credits run between $4 million and $5 million annually, said Lowell Kalapa, president of the Tax Foundation of Hawai'i.
Hawaiian Electric energy services department manager Dave Waller said customers are installing more than 3,000 units a year, and have put in 20,000 units since its integrated resource planning program was launched in 1996. On Kaua'i, the utility has seen 331 units installed since 1998, said Raymond Mierta, energy services specialist for Kaua'i Island Utility Co-op.
Kalapa said he supports solar water heating, but finds the tax credit regressive, since the rich can afford to install a system regardless of credits, and the poor can't come up with the cost of the unit upfront, at an average price of about $4,600. "We would really prefer to see something else happen, like a loan program for the poor," Kalapa said.
Before accountants begin multiplying units times tax breaks, they should consider the return to the state, said private economist Thomas Loudat, who conducted an economic impact study of solar water heaters.
Sales of these units generate sales taxes, installer employee income taxes, taxed company profits, and taxes on the money consumers spend in the local economy instead of on electric bills, much of which would otherwise go abroad to pay for oil. Ultimately, Loudat said, the state gets back about $180 for every $100 it loses to the tax credit. And it gets about two-thirds of the tax credit returned in the first year.
Similar numbers on wind and solar photovoltaic project returns have not been calculated, but Warren Bollmeier, a wind energy advocate and member of the Energy Efficiency Policy Task Force, said fossil fuels still get far more state and federal government help than renewable technologies. "The field is still not level with respect to fossil fuels in terms of tax breaks," Bollmeier said.
English said his efficiency bill proposes capping the tax breaks for industrial-sized ice storage and heat pump projects as a way to limit the loss in state revenues.
His bill for solar/wind credits has not set specific percentages, but English said he expects lawmakers to agree to the existing 35 percent, or perhaps a few percentage points more.
"I'm optimistic. I think they will both pass," he said.
Reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.
• • •
Affordable Solar Contracting (1, 2)
- 25-B Kilea Place
- Mililani, HI 96786
- Phone: 623-1115
- Contact: Douglas White
Allen's Plumbing Inc. (4)
- P.O. Box 5060
- Kahului, HI 96732
- Phone: (888) 877-4428
- Contact: Steve Allen
Alternate Energy (1, 2)
- 6023 Kaniela Place
- Honolulu, HI 96821
- Phone: 396-6127 or 842-5853
- Contact: Bruce Ekimura
Andersun Solar1
- 549 Halema'uma'u St., #C-2
- Honolulu, HI 96821
- Phone: 396-9288
- Contact: Bill Anderson
Apollo Solar
- Pier 35 N. Nimitz Highway
- Honolulu, HI 96817
- Phone: 538-6703
- Contact: David Hutchinson
C&J Solar Solutions (2, 3)
- 45-605 Uhilehua St.
- Kane'ohe, HI 96744
- Phone: 247-8064
- Contact: Christina Perreira
Creative Plumbing (2)
- 909 'Eu Lane
- Honolulu, HI 96817
- Phone: 841-2837
- Contact: Stephen Manabe
Dakmi Solar (3)
- P.O. Box 4656
- Kane'ohe, HI 96744
- Phone: 845-6601
- Contact: Roger Nite
Energy Unlimited (1, 2, 3)
- 167 Mahealani St.
- Kailua, HI 96734
- Phone: 263-0245, 533-0356
- Contact: Peter Chiswick
GSI Solar, Ltd. (1, 3)
- 1733-B Kalani St.
- Honolulu, HI 96819
- Phone: 845-5881
- Contact: David Harada
Grand Solar (1, 2, 3)
- 4882-4 Kilauea Ave.
- Honolulu, HI 96816
- Phone: 737-3536
- Contact: John Grandinetti
Hawaiian Island Solar (2)
- 45-934 Kamehameha Highway, PMB C120
- Kane'ohe, HI 96744
- Phone: 261-9740
- Contact: Gary Ralston
Hi-Tech Plumbing Corp. (1, 4)
- 94-150 Leoleo St., Unit 10B
- Waipahu, HI 96797
- Phone: 676-2557
- Contact: Kerry Hara
M. Torigoe Plumbing Inc. (3, 4)
- 1616 Kahai St.
- Honolulu, HI 96819
- Phone: 841-4417
- Contact: Maurice Torigoe
Mercury Solar (1, 2, 3)
- P. O. Box 240471
- Honolulu, HI 96824
- Phone: 373-2257
- Contact: Scott Sparkman
Pacific Solar (1)
- 401 Kamakee St., Suite 401
- Honolulu, HI 96814
- Phone: 593-4464
- Contact: Marc Anthony
Pacific Water Conservation Co. (2, 4)
- 1804 Colburn St.
- Honolulu, HI 96819
- Phone: 841-8081
- Contact: Kevin Kanekoa
Poncho's Solar (1, 2, 3)
- 4355 Lawehana St., #7
- Honolulu, HI 96818
- Phone: 422-4266
- Contact: Poncho Safranca
Regent Plumbing
- 94-1079 Akaku St.
- Mililani, HI 96789
- Phone: 625-1080
- Contact: Ed Young
Solar Engineering & Contracting (1, 2, 3)
- 254 B Mokauea St.
- Honolulu, HI 96819
- Phone: 842-7110
- Contact: Paul Lucas
Sun King (1, 3, 4)
- 1376 Kapi'olani Blvd., #205
- Honolulu, HI 96814
- Phone: 599-7793
- Contact: Paul Spencer
1 — Member of the Hawaii Solar Energy Association
2 — Performs HECO warranty service
3 — Offers HECO financing
4 — Also performs heat pump installations
• • •
Ice storage: Makes ice when electric rates are lower, and uses ice instead of electricity to air-condition buildings when rates are higher, reducing the buyer's costs and shifting the utility's load from peak to off-peak times.
Heat Pump: Acts as a water heater and reversible air conditioner. In cold weather, moves heat into the house; in hot weather, it moves heat out. More efficient than traditional electric heating and cooling systems.
Solar water heaters: Come in various forms, but systems normally have glass-covered panels that heat up in the sun. Hot water is stored in traditional-looking tanks. In most part of the Islands, homes with properly sized systems require no additional water heating 95 percent of the time.
Solar photovoltaics: Panel of silicon wafers placed in the sunshine produces electrical current, which can be used or stored. Photovoltaic energy is produced as direct current — the kind that comes out of batteries — but can be transformed into alternating current — the kind that comes out of the wall socket.
Wind energy: The most familiar devices are simple generators attached to propellers. When the wind blows, they produce electrical power, which can be fed into the Islands' utility grids or used in small-scale operations to charge batteries.
Penciling out cost of solar water systems
A solar-powered water heating system can pay for itself in about four years, assuming an electicity bill savings of $50 per month.
Average cost of solar unit, installed $4,600.00
HECO rebate (paid to contractor) 750.00
State tax credit (35 percent) 3,850.50
Homeowner cost 2,502.50
NOTE: Utility rebate policies differ. Kaua'i customers may need to meet usage, income and other criteria to qualify for rebates that can range from $750 to 70 percent of unit's cost.
Sources: Inter-Island Solar Supply, state Dept. of Business, Economic Development and Tourism, Hawaiian Electric Co., Kaua'i Island Utility Co-op, economist Tom Loudat
