Solar Credit Boost
Hawaii Governor Green Preserves Solar Tax Credits for 2026, Shielding Projects from New Act
Key Points
Hawaii officials said Executive Order 26-02 “recognizes the critical importance of maximizing distributed solar resources, particularly on Oahu,” and it was described as affirming Green’s earlier Executive Order 25-01 on distributed solar.
State and industry figures cited that Hawaii ranks first nationally for per-capita residential rooftop solar adoption and that rooftop systems cover close to half of Hawaii households statewide—conditions backers said help reduce grid demand and put “downward pressure on rates for all customers.”
The solar industry said Act 24’s changes could force investors to pull out of deals: one report put “256 projects valued at $436 million in the pipeline for this year” at risk.
Reporting on the credit’s scale and eligibility: Hawaii’s Department of Taxation data said the Renewable Energy Technologies Income Tax Credit had dispersed more than $684 million to 79,711 claims since 2015, including more than $100 million to roughly 11,000 claimants in 2023.
The reporting added operational constraints under the preservation order: the $40 million annual cap remains for future years (as described until the credits are eliminated), and taxpayers who did not complete projects before May 21 would need to show they assembled financing that relied on the prior tax-credit guidance.
Hawaii Gov. Josh Green signed Executive Order 26-02 to protect solar tax credits for 2026, blocking changes from a new budget law from taking effect until 2027. The move shields roughly 256 projects worth $436 million that were thrown into doubt after the Legislature passed Act 24 last May, Hawaii Tribune-Herald reported.
Act 24 cut and capped the state's Renewable Energy Technologies Income Tax Credit — a 35% tax break on solar system costs — and applied those limits retroactively. Green's order keeps the old rules alive for 2026 for projects where investors had already lined up financing under the prior law.
Act 24 Threatened Hundreds of Solar Deals Already Underway
The Legislature passed Act 24 on May 21 to close a projected $3 billion gap from expected federal revenue losses. To do it, lawmakers imposed a $40 million annual cap on the solar tax credit and applied the rules backward to January 2026. That retroactive move left investors who had already committed money to projects without the tax savings they had counted on, according to West Hawaii Today.
The Hawaii Solar Energy Association said 256 commercial and residential projects valued at $436 million sat at risk. Since 2015, the state's Renewable Energy Technologies Income Tax Credit had paid out more than $684 million across nearly 80,000 claims, according to Hawaii Department of Taxation data cited by Kauai Now News. In 2023 alone, about 11,000 claimants received more than $100 million.
Green's Order Draws a Clear Line at 2027
Executive Order 26-02 does not erase Act 24. It delays the law's most restrictive rules by one year. The $40 million annual cap will still apply starting in 2027, and the credits are set to be phased out after that. Green said the order "protects investment decisions made in recent months while honoring the Legislature's longer-term adjustments for 2027 and beyond," according to Hawaii Tribune-Herald.
To qualify for 2026 relief, taxpayers who had not finished their projects before May 21 must show they had assembled financing based on the old tax-credit rules. That proof requirement gives the Hawaii Department of Taxation a way to screen claims. The order also affirms Green's earlier Executive Order 25-01, which prioritized distributed solar on Oahu, according to Kauai Now News.
Rooftop Solar Covers Half of Hawaii Homes — and Keeps Bills Down
Hawaii ranks first in the nation for per-capita residential rooftop solar adoption. Close to half of all households statewide have solar panels. Supporters say that scale matters beyond just clean energy. More rooftop generation means less demand on the grid, which puts downward pressure on electricity rates for all customers — including renters who cannot install solar themselves, according to Hoodline.
The order specifically calls out Oahu, saying it "recognizes the critical importance of maximizing distributed solar resources, particularly on Oahu." Oahu has the state's most strained grid and the highest population. Energy analysts say rooftop solar there is cheaper for the state than building new large utility-scale power plants. Hawaii state law requires all electricity sold in the state to come from renewable sources by 2045.
Fiscal Hawks Question Whether an Executive Order Can Pause a Law
Not everyone welcomed the move. Some fiscal conservatives in the Legislature argued that Green overstepped his authority. They said using an executive order to delay a duly passed tax cap sets a dangerous precedent — one where any industry can lobby its way around a law. The Legislature's stated goal was to stop spending $100 million a year on a credit they viewed as a subsidy to a mature industry, according to Honolulu Star-Advertiser.
Tax experts also flagged a practical problem. Proving that a financing deal "relied on prior tax-credit guidance" requires auditing the intent and timing of hundreds of financial agreements. That puts a heavy burden on the Hawaii Department of Taxation to sort eligible from ineligible claims. The 2027 deadline is now firm — developers have a narrow window to finish projects before the $40 million cap becomes an absolute ceiling with no executive escape, according to Hoodline.
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