Hawaii changes renewable energy tax credit

Associated Press Modified: November 9, 2012 at 8:45 pm •  Published: November 9, 2012
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HONOLULU (AP) — The state Department of Taxation on Friday issued new rules for the renewable energy tax credits that have spurred more residents to install solar panels.

The department said it is doing so to provide clarity to taxpayers, but environmentalists and renewable energy advocates said the new rules jeopardize the state's progress in moving away from imported fossil fuels.

The rules, which will take effect on Jan. 1, require renewable energy systems to meet set output capacity requirements. The Sierra Club and Earthjustice said the change would limit the solar tax credit for the average residential solar power system to $5,000. This would effectively cut the tax credit in half and put solar power out of the reach of many families, they said.

The department explained its decision by saying the previous rules, issued in 2010, created uncertainty and an un-level playing field. The department has been receiving complaints about the rules for more than a year, it said.

The law people grants residents and businesses a tax credit for installing a renewable energy system. Some people, however, have been advised by the companies putting in their solar panels to say their installation consists of multiple systems and then claimed the credit multiple times. This has made solar panels more affordable and encouraged many more people to buy them but it's also depleted tax revenues and made it harder for the state to balance its budget.

"After listening to taxpayers concerns, the department is issuing these new temporary rules in order to provide consistent, uniform and fair application of the tax credit law, while still supporting the State's public policy goal of reducing our reliance on fossil fuel," the department said in a statement.

Sierra Club Hawaii Director Robert Harris said such a "sudden, extreme" reduction in the tax credit is misguided.

"The governor should not slam the breaks on solar energy in Hawaii," Harris said.