RELATING TO RENEWABLE ENERGY.

SB2888

THE SENATE

S.B. NO.

2888

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to renewable energy
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

Part I

����
SECTION
1.
�
The legislature finds that Hawaii has
the nation's highest residential electricity cost per kilowatt hour at more
than triple the average United State's price.
�

However, the State also has one of the highest rates of rooftop solar
adoption in the nation.

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The
legislature further finds that the federal residential clean energy credit for rooftop
solar ends December 31, 2025, nine years ahead of schedule, which will increase
out-of-pocket costs for residential rooftop solar installations.
�
Small‑scale, consumer‑sited rooftop
solar provided approximately fifteen per cent of total electricity generation
in the State in 2024 and the residential solar industry supports more than two
thousand five hundred jobs.
�
Continued
incentives for rooftop solar are necessary to ensure the State can reach its
renewable energy mandates and continue support for the State's solar job
market.

����
The
legislature further finds that the elimination of the federal
residential
clean energy credit for rooftop solar effective January 1, 2026, constitutes an
emergency threatening Hawaii's clean energy transition, solar industry
viability, and energy affordability for residents, requiring immediate
implementation of this Act.

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The
legislature further finds that over ninety per cent of the State's total energy
consumption is from petroleum, the highest in the nation.
�
Additionally, all of the petroleum used in
the State is imported.
�
The substantial
revenues raised each year from the environmental response, energy, and food
security tax on imported petroleum, also known as the barrel tax, can be
directed toward growing the State's residential rooftop solar adoption as a way
to reduce reliance on imported fossil fuels.
�

Growing rooftop solar installation and investment will also provide
continued economic and employment opportunities for local residents.

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The
legislature further finds that direct rebates for rooftop solar installation may
offer more accessible energy cost relief for low‑ and moderate‑income
families, who typically spend the highest proportion of their income on energy
costs.

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Accordingly,
the purpose of this Act is to:

����
(1)
�
Increase the rooftop solar tax credit
to forty five per cent for tax years beginning after December 31, 2025 through
December 31, 2030;

����
(2)
�
Establish a direct solar rebate program
for low- and moderate‑income households;

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(3)
�
Streamline rooftop solar county
permitting; and

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(4)
�
Provide resources to the Hawaii state energy
office workforce development program to connect job seekers with rooftop solar
jobs.

Part II

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SECTION

2
.
�
Section
235-12.5, Hawaii Revised Statutes, is amended by amending subsections (a) and
(b) to read as follows:

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"
(a)
�
Each individual or corporate taxpayer that
files an individual or corporate net income tax return for a taxable year may
claim a tax credit under this section against the Hawaii state individual or
corporate net income tax.
�
The tax credit
may be claimed for every eligible renewable energy technology system that is
installed and placed in service in the State by a taxpayer during the taxable
year.
�
The tax credit may be claimed as
follows:

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(1)
�
[
For
]

Regardless of when the taxpayer files a tax return, for
each solar
energy system[
:
]
installed on or before December 31, 2025:
�
thirty-five per cent of the actual cost or
the cap amount determined in subsection (b);
and for each solar energy
system purchased or installed on or after January 1, 2026:
�
forty-five per cent of the actual cost or the
cap amount determined in subsection (b),
provided that:

���������
(A)
�
For
taxable years beginning after December 31, 2019, and except as provided in
subparagraphs (B) and (C), no tax credit may be claimed for a solar energy
system that is five megawatts in total output capacity or larger and requires a
power purchase agreement approved by the public utilities commission;

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(B)
�
A
solar energy system that is five megawatts in total output capacity or larger,
installed and placed in service pursuant to a power purchase agreement approved
or pending approval by a decision and order by the public utilities commission
prior to December 31, 2019, shall continue to receive a tax credit equal to
thirty‑five per cent of the actual cost, or $500,000 per solar energy
system that has a total output capacity of at least one thousand kilowatts per
system of direct current, whichever is less; and

���������
(C)
�
For
each solar energy system integrated with a pumped hydroelectric energy storage
system, the tax credit may be claimed for thirty-five per cent of the actual
cost or the cap amount determined in subsection (b), whichever is less;
provided that applicable project approval filings have been made to the public
utilities commission by December 31, 2021; or

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(2)
�
For each wind-powered energy
system:
�
twenty per cent of the actual
cost or the cap amount determined in subsection (b), whichever is less;

provided
further that multiple owners of a single system shall be entitled to a single
tax credit; and provided further that the tax credit shall be apportioned
between the owners in proportion to their contribution to the cost of the
system.

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In
the case of a partnership, S corporation, estate, or trust, the tax credit
allowable is for every eligible renewable energy technology system that is
installed and placed in service in the State by the entity.
�
The cost upon which the tax credit is
computed shall be determined at the entity level.
�
Distribution and share of credit shall be
determined pursuant to administrative rule.

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(b)
�
The amount of credit allowed for each
eligible renewable energy technology system shall not exceed the applicable cap
amount, which is determined as follows:

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(1)
�
If the primary purpose of the solar
energy system is to use energy from the sun to heat water for household use,
then the cap amounts shall be:

���������
(A)
�
$2,250 per system for single-family
residential property;

���������
(B)
�
$350 per unit per system for
multi-family residential property; and

���������
(C)
�
$250,000 per system for commercial
property;

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(2)
�
For all other solar energy systems, the
cap amounts shall be:

���������
(A)
�
[
$5,000
]
$7,500
per
system for single-family residential property;
provided that
if all or a portion of the system is used to fulfill the substitute renewable
energy technology requirement pursuant to section 196-6.5(a)(3), the credit
shall be reduced by thirty-five per cent of the actual system cost or $2,250,
whichever is less;

���������
(B)
�
$350 per unit per system for
multi-family residential property; and

���������
(C)
�
$500,000 per system for commercial
property; and

����
(3)
�
For all wind-powered energy systems,
the cap amounts shall be:

���������
(A)
�
$1,500 per system for single-family
residential property;
provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
twenty per cent of the actual system cost or $1,500, whichever is less;

���������
(B)
�
$200 per unit per system for
multi-family residential property; and

���������
(C)
�
$500,000 per system for commercial
property."

Part III

����
SECTION
3.
�
Chapter 196, Hawaii Revised Statutes,
is amended by adding a new section to be appropriately designated and to read
as follows:

����
"
�196-
�
Direct solar rebate program.
�
(a)

The Hawaii state energy office shall establish the direct solar
rebate program to provide financial assistance and improve access to
residential rooftop solar systems for low- and moderate‑income
households.

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(b)
�
Households with annual incomes at or below
one hundred forty per cent of the area median income shall be eligible for a
rebate under the program for installation of a residential rooftop solar system
as follows:

����
(1)
�
A household with an annual income at
or below eighty per cent of the area median income shall receive a rebate of
$5,000 per system; and

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(2)
�
A household with an annual income
between eighty‑one per cent and one hundred forty per cent of the area
median income shall receive a rebate of $3,000 per system.

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(c)
�
Households that install battery energy
storage systems in combination with
residential rooftop solar
systems under this program shall receive an additional rebate of:

����
(1)
�
$2,000 for systems with at least ten
kilowatt-hours of storage capacity
; or

����
(2)
�
$3,500 for systems with at least twenty
kilowatt-hours of storage capacity
.

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(d)
�
Battery energy storage system rebates described
in subsection (c) may be combined with rebates described in subsection (b) but
shall not exceed a total combined rebate of $8,000.

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(e)
�
Rebates described in subsection (b) may be
combined with tax credits described in section 235-12.5 and any other available
incentives.

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(f)
�
Landlords or other housing providers may be
eligible for a rebate under the program; provided that:

����
(1)
�
Each tenant household, at the time
of application, meets the area median income limits described in subsection
(b); and

����
(2)
�
Energy cost savings are passed
through to tenants either through direct energy bill credits or an annual
reduction in rent equal to the amount of the rebate divided by the number of
tenant households.

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(g)

�
In furtherance of the program, the Hawaii
state energy office shall:

����
(1)
�
Establish a streamlined application
process to provide approval or denial decisions within thirty days of receiving
a complete application;

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(2)
�
Provide rebates as direct payments to
applicants within sixty days of installation and inspection;

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(3)
�
Coordinate with and provide
information on approved licensed contractors to approved applicants to ensure
quality installation;

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(4)
�
Prioritize applications from
households with a high energy cost burden;

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(5)
�
Provide multilingual information and
assistance to applicants;

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(6)
�
Accept applications from homeowners
and renters; provided that renters shall provide evidence of landlord agreement;

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(7)
�
Establish partnerships with
community-based organizations, particularly those serving Native Hawaiian,
Pacific Islander, and low-income communities, to conduct outreach and provide
application assistance;

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(8)
�
Create an online portal showing:

���������
(A)
�
Current program funding
availability;

���������
(B)
�
Estimated wait times for applications;

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(C)
�
List of approved solar contractors
with customer ratings; and

���������
(D)
�
Typical system costs and energy
savings by island and household size;

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(9)
�
Reserve at least thirty per cent of
annual program funds for households at or below eighty per cent of area median
income; and

���
(10)
�
Implement a waitlist system if
applications exceed funding, with priority given to:

���������
(A)
�
Households with the highest energy
cost burden;

���������
(B)
�
Hawaiian home lands residents;

���������
(C)
�
Environmental justice communities;
and

���������
(D)
�
Households in areas with frequent
power outages.

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(h)

�
The Hawaii state energy office shall provide
an annual report on the program to the legislature no later than twenty days
prior to the convening of each regular session, which shall include the
following information:

����
(1)
�
Number and demographic data of
households served;

����
(2)
�
Total solar capacity installed under
the program;

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(3)
�
Estimated energy cost savings for
approved households;

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(4)
�
Job creation impacts;

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(5)
�
Progress toward renewable energy
goals; and

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(6)
�
Program improvement recommendations.
"

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SECTION

4
.
�
Section
46-19.4, Hawaii Revised Statutes, is amended to read as follows:

����
"[
[
]�46-19.4
�
Priority permitting process for renewable
energy projects[
.]
]
; electronic application on system; residential
solar.
�
(
a)
All agencies shall provide
priority handling and processing for all county permits required for renewable
energy projects.

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(b)
�
All agencies shall establish an electronic application
system for all county permits required for residential solar
installations.
�
Access to the system
shall be available to applicants twenty-four hours per day, seven days per
week.

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(c)
�
All agencies shall approve or deny all county
permits required for residential solar installations within ten business days
of receiving a complete application; provided that failure to approve or deny a
permit within ten business shall result in automatic approval of the permit;
provided further that the permit applications shall meet all statutory safety
and building code requirements.

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(d)
�
All agencies shall develop a standard permit
application checklist for residential solar installations.

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(e)
�
All agencies shall develop pre-approved
designs for typical residential solar installations.

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(f)
�
Each county shall designate a solar
permitting ombudsman to assist applicants and resolve disputes relating to
permitting delays or denials.

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(g)

�
Each county shall provide a quarterly
report to the legislature on the following:

����
(1)
�
Average permit processing times;

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(2)
�
Percentage of permits approved or
denied within the required timeframe;

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(3)
�
Common reasons for delays or
denials; and

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(4)
�
Improvement initiatives.

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(h)
�
For purposes of this section,
"agencies" means any executive department, independent commission,
board, bureau, office, or other establishment of a county, or any quasi-public
institution that is supported in whole or in part by county funds."

Part
IV

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SECTION
5.
�
(a)
�

Pursuant to section 269-142, Hawaii Revised Statutes, the public
utilities commission shall, within one hundred eighty days of the effective
date of this Act, adopt rules requiring electric utilities in the State to:

����
(1)
�
Process solar interconnection
applications within fifteen business days of receiving a complete application;

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(2)
�
Compensate
applicants $100 per week for each week of delay beyond the fifteen-business-day
requirement, payable as a credit on the applicant's first bill after system
interconnection;

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(3)
�
Employ
additional interconnection personnel if application processing delays exceed
thirty business days on more than ten per cent of applications per quarter;

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(4)
�
Provide online application and status
tracking;

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(5)
�
Use standardized solar interconnection
agreements;

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(6)
�
Minimize on-site inspection
requirements when safe to do so; and

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(7)
�
Provide a quarterly report on
interconnection processing data to the public utilities commission no later
than ninety days after the end of each quarter.

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(b)
�
The
public utilities commission shall impose administrative penalties on electric
utilities that fail to meet the interconnection processing timelines
established in this Act as follows:

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(1)
�
A
warning for the first violation; and

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(2)
�
For
any application delayed beyond the fifteen business day requirement thereafter,
a fine of $500 per day per application.

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SECTION
6.
�
(a)
�

The Hawaii state energy office shall enhance its workforce development
program focusing on jobs in the residential solar installation sector by:

����
(1)
�
Providing assistance and information on
employment in the rooftop solar industry to job seekers, prioritizing those who
are:

���������
(A)
�
Displaced workers from fossil fuel
industries;

���������
(B)
�
Young adults residing in areas of high
unemployment;

���������
(C)
�
Residents of environmental justice
communities;

���������
(D)
�
Veterans transitioning to civilian
careers;

���������
(E)
�
Native Hawaiians; and

���������
(F)
�
Any other underserved populations;

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(2)
�
Connecting job seekers to
apprenticeships in the rooftop solar industry;

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(3)
�
Providing certification for solar
installers and electricians;

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(4)
�
Expanding partnerships with community
colleges, trade schools, and other groups to share information and identify
workforce needs;

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(5)
�
Partnering
with the Hawaii Solar Energy Association and solar contractors to ensure
training curricula meet current industry needs and standards;

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(6)
�
Providing
stipends or scholarships to offset training costs for eligible participants
from low-income households;

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(7)
�
Requiring
apprenticeship programs that receive State support to:

���������
(A)
�
Pay
apprentices at least seventy-five per cent of the journeyman wage; and

���������
(B)
�
Achieve
a permanent job placement rate of at least sixty per cent within six months of
program completion; and

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(8)
�
Track
and report annually on:

���������
(A)
�
The
number of participants trained;

���������
(B)
�
Job
replacement rates and wages;

���������
(C)
�
Diversity
metrics; and

���������
(D)
�
Retention
rates after one year of employment.

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(b)
�
The Hawaii state energy office shall provide
support to counties to implement the requirements described in section 4,
including:

����
(1)
�
Model ordinances for solar permitting;

����
(2)
�
Training for county permitting staff;

����
(3)
�
Coordination and knowledge sharing
between counties;

����
(4)
�
Resources for installers and
households.

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SECTION 7.
�

The department of business, economic development, and tourism; Hawaii
state energy office; and the public utilities commission may adopt interim
rules using expedited rulemaking procedures under section 201M-7, Hawaii
Revised Statutes, to implement this Act; provided that:

����
(1)
�
Interim
rules shall take effect no later than one hundred twenty days after the
effective date of this Act; and

����
(2)
�
Permanent
rules shall be adopted within one year after the effective of this Act.

Part
V

����
SECTION
8.
�
There is appropriated out of the energy
security special fund the sum of $10,000,000 or so much thereof as may be
necessary for fiscal year 2026-2027 for the establishment of the direct solar
rebate program.

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The
sum appropriated shall be expended by the Hawaii state energy office for the
purposes of this Act.

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SECTION
9.
�
There is appropriated out of the energy
security special fund the sum of $2,000,000 or so much thereof as may be
necessary for fiscal year 2026-2027 for the enhancement of Hawaii state energy
office's solar workforce development initiatives.

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The
sum appropriated shall be expended by the Hawaii state energy office for the
purposes of this Act.

����
SECTION
10.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

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SECTION
11.
�
This Act shall take effect on July
1, 2026; provided that part II shall repeal on January 1, 2031; provided
further that section 235-12.5, Hawaii Revised Statutes, shall be reenacted in
the form in which it read the day before the effective date of this Act.

INTRODUCED BY:

_____________________________

Report Title:

Department of Business, Economic Development, and Tourism
; HSEO; Counties; Renewable Energy;
Rooftop Solar; Tax Credit; Direct Rebate; Solar Permitting; Workforce
Development; Interim Rules; Energy Security Special Fund; Appropriations

Description:

Increases
the rooftop solar tax credit to forty five per cent
for tax years
beginning after December 31, 2025 through December 31, 2030.
�
Establishes the Direct Solar Rebate Program
to be administered by the Hawaii State Energy Office for low‑ and
moderate-income households.
�
Streamlines
rooftop solar permitting and requires the counties to develop electronic
application systems.
�
Requires the Hawaii
State Energy Office to enhance workforce development and coordinate with county
permitting agencies.
�
Authorizes the
adoption of interim rules.
�
Appropriates
funds.

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not legislation or evidence of legislative intent.