Solar Water Heaters in Hawaii: 2026 Cost, Rebates by Island and the New Tax Credit Rules
Short answer: for a Hawaii household that heats water with an electric tank and has a sunny roof, solar water heating is still one of the best-value upgrades in 2026, even without the federal tax credit. Hawaiian Electric puts the average system at about $9,200; Hawaii Energy now pays an instant rebate of $2,350 to $2,750 (by island and tank size), and the state tax credit can take off up to $2,250 more, which Hawaii Energy says brings a system to around $4,500. On Kauai, KIUC offers $1,500 or a zero-interest loan. Two things changed this year: the federal credit is gone, and the state credit now has a yearly cap and, from 2027, income limits.
Last updated October 21, 2026. We are an independent referral service, not a contractor, utility or tax adviser. Rebates and tax rules change; confirm with the program and a tax professional before you sign. Sources are listed at the bottom.
Hawaii Energy solar water heater rebates (July 1, 2026 to June 30, 2027)
From Hawaii Energy's 2026-2027 residential application. Instant rebate, deducted on the invoice by a participating Clean Energy Ally contractor; first-come, first-served while funding lasts.
| System size | Oahu | Hawaii Island | Maui, Molokai, Lanai |
|---|---|---|---|
| 50 to 80 gallon | $2,350 | $2,450 | $2,600 |
| 105 to 120 gallon | $2,500 | $2,600 | $2,750 |
- Who qualifies: residential electric customers on Oahu, Hawaii Island, Maui, Molokai and Lanai. The home must be an existing home occupied year-round (owner, landlord with waiver, or tenant). New construction does not qualify.
- Old water heater: the application asks what you are replacing; it marks gas and tankless water heaters as not eligible, so the rebate is aimed at replacing electric, heat pump or old solar systems. Ask the contractor to confirm for your home.
- Paperwork: the contractor must get a Hawaii Energy work order before installing, list a permit number, and submit the application within 30 days of purchase. The invoice has to show the rebate and total system cost.
- No stacking: it cannot be combined with other Hawaii Energy rebates or offers.
- Financing: Hawaii Energy's Hot Water, Cool Rates program applies the rebate toward a zero- to low-interest loan through a participating lender instead.
Heads-up: Hawaiian Electric's solar water heating page still shows a $2,000 rebate and a 2025 federal tax credit in its sample math. Both are out of date for a 2026 installation.
Kauai: KIUC rebate or zero-interest loan
Hawaii Energy rebates do not apply on Kauai. KIUC members who replace an existing electric water heater, or a non-working solar water heater, with a whole solar system (panels and tank) can choose a $1,500 rebate or a zero-interest loan through Gather Federal Credit Union. You apply through one of KIUC's participating solar contractors, listed on KIUC's site. KIUC also offers a $50 water heater timer rebate. KIUC: 808-246-4300.
The state tax credit in 2026 and after
Hawaii's Renewable Energy Technologies Income Tax Credit (RETITC, Form N-342) covers solar water heating. For a single-family home it is 35% of the cost or $2,250, whichever is less, and utility rebates are subtracted from the cost first. Act 24 (SB 3125), signed May 21, 2026, changes it:
- Certification and a cap: credits must be certified by the Hawaii State Energy Office, and there is a $40 million statewide annual cap. The Department of Taxation says the cap applies to credits claimed in 2027 for 2026 systems, except systems placed in service before May 21, 2026, or 2026 systems where the owner paid or incurred costs before that date (Executive Order 26-02, TIR 2026-02).
- Income limits from tax year 2027: no credit if adjusted gross income is over $175,000 (individual) or $350,000 (joint).
- Sunset: the credit is not available for taxable years beginning after December 31, 2029.
- Federal: the Hawaii State Energy Office says the federal residential clean energy credit (25D) generally ended for property placed in service after December 31, 2025.
Because the state cap is statewide and first-claimed, a credit is no longer something to treat as guaranteed. Price the project so it still makes sense with the rebate alone, and treat the credit as a bonus. Ask a tax professional.
What it costs, with the math
Example only, using Hawaiian Electric's ~$9,200 average and an 80-gallon system on Oahu. Your quote will differ.
| Step | Amount |
|---|---|
| Average installed system (Hawaiian Electric) | $9,200 |
| Hawaii Energy instant rebate, Oahu, 50 to 80 gallon | −$2,350 |
| Cost after rebate | $6,850 |
| State credit: 35% of $6,850 is $2,398, capped at $2,250 (if you qualify and the cap has room) | −$2,250 |
| Net | about $4,600 |
That lines up with Hawaii Energy's "around $4,500" figure. Without the state credit the example is about $6,850.
What it saves
Hawaii Energy says that for families of four or more a solar water heater can cut the electric bill by up to 40%, over $1,900 a year; it has a savings calculator on its site. Hawaiian Electric says a system is designed to cover about 90% of hot water needs over a year. Savings grow with electricity prices: Hawaiian Electric's October 2026 residential baseline rate was 45.8¢ per kWh on Oahu, 44.6¢ on Maui and 46.8¢ on Hawaii Island, roughly 10 cents higher than a year earlier on Oahu. Smaller households, or homes already using a heat pump water heater, save less.
How it works and what can go wrong
Collector panels on the roof, a storage tank, an electric backup element, a timer, temperature sensors and a thermostat. When the collector is hot enough, a pump moves water from the tank to the collector and back during the solar day (about 9 a.m. to 3 p.m.). On runs of cloudy or rainy days the electric backup takes over. Common service calls are worth knowing about before you buy:
- Backup element running all the time: a failed sensor, pump or controller can leave the backup doing all the work while the system looks fine, so a rising bill is often the first sign. A timer on the backup element keeps it off during the evening peak.
- Leaks at the tank or roof: collectors and roof penetrations need flashing and checks, especially if the roof is due for replacement. Ask whether collectors will need to come off when the roof is redone and what that costs.
- Tune-ups: Hawaii Energy recommends one every 5 years (see below).
Tune-up rebate for existing systems
If your system is at least 5 years old and has not had a tune-up in 5 years, Hawaii Energy offers an instant rebate when a participating contractor does the service: up to $325. Its January 2026 announcement listed $250 on Oahu, $300 in Hawaii County and $325 in Maui County. The system does not need to be one Hawaii Energy rebated before, and newly purchased homes qualify.
Solar, heat pump, or keep the tank?
| Solar water heater | Heat pump water heater | |
|---|---|---|
| Typical up-front | ~$9,200 average (Hawaiian Electric) | Unit $1,700 to $2,500 plus install (Hawaii Energy) |
| Hawaii Energy rebate | $2,350 to $2,750 | $500 to $700 in store |
| Kauai (KIUC) | $1,500 or zero-interest loan | $500 |
| State tax credit | Yes, up to $2,250 (capped, income limits from 2027) | Not confirmed; ask a tax pro |
| Needs | Sunny roof space, roof in good shape | Garage or ventilated space, condensate drain, often 240V |
Solar usually wins on long-run electricity savings if you have the roof and plan to stay. A heat pump wins when roof space, shade, condo rules or budget rule out solar. Details are in our heat pump water heater guide and our water heater replacement cost guide.
Questions to ask before you sign
- Are you a Hawaii Energy Clean Energy Ally (or a KIUC participating contractor on Kauai), and will the rebate be shown on the invoice?
- What is your Hawaii contractor license number? Check it free on the DCCA license search. A contractor license is required for jobs over $1,500 or that need a permit.
- Will you pull the permit, and is it in the price?
- What tank size do you recommend for my household, and does that change the rebate tier?
- What warranty covers the collectors, tank, pump and controller, and who services it?
- Is there a timer on the backup element, and how will I know if the solar side stops working?
- What happens to the collectors when my roof needs replacing?
Get quotes
Call (808) 772-0705 or use the quote form. Tell us your island and town, what water heater you have now, how many people live in the home, and whether the roof gets good sun. We will work to route your request to an independent licensed company; coverage outside Oahu may be limited.
FAQ
How much does a solar water heater cost in Hawaii in 2026?
Hawaiian Electric puts the average system at about $9,200 installed, depending on tank size and need. Hawaii Energy's instant rebate for 2026-2027 is $2,350 to $2,750 depending on island and tank size, and Hawaii Energy says that with its rebate and the state tax credit a system can come to around $4,500. Your own quote will vary with roof access, tank size and piping runs.
How much is the Hawaii Energy solar water heater rebate?
For July 1, 2026 through June 30, 2027, or while funding lasts: Oahu $2,350 (50 to 80 gallon) or $2,500 (105 to 120 gallon); Hawaii Island $2,450 or $2,600; Maui, Molokai and Lanai $2,600 or $2,750. It is an instant rebate taken off the invoice by a participating Clean Energy Ally contractor, and it cannot be combined with other Hawaii Energy offers.
Is there still a tax credit for solar water heaters in Hawaii?
The federal residential clean energy credit ended for property placed in service after December 31, 2025. Hawaii's state credit (RETITC) still covers solar water heating: 35% of cost up to $2,250 for a single-family home, figured after utility rebates. Act 24 (2026) adds Hawaii State Energy Office certification and a $40 million yearly cap, adds income limits starting with tax year 2027 ($175,000 single, $350,000 joint), and ends the credit after 2029. Confirm with a tax professional.
Can I get a solar water heater rebate on Kauai?
Not from Hawaii Energy. KIUC offers a $1,500 rebate or a zero-interest loan (through Gather Federal Credit Union) when you replace an existing electric water heater or a non-working solar water heater with a whole solar system (panels and tank), installed by a KIUC participating contractor. Call KIUC at 808-246-4300.
How often does a solar water heater need a tune-up?
Hawaii Energy recommends a tune-up every 5 years and offers an instant rebate for residential systems at least 5 years old on Oahu, Hawaii Island, Maui, Molokai and Lanai. Its January 2026 announcement listed $250 on Oahu, $300 in Hawaii County and $325 in Maui County; confirm the current amount with the contractor.
Does a new home qualify for the solar water heater rebate?
No. Hawaii Energy's 2026-2027 application requires an existing home occupied year-round, and its tune-up terms say newly constructed homes do not qualify (newly purchased homes do). Most new single-family homes in Hawaii must already include solar water heating under state law, and the state tax credit instructions say the credit cannot be claimed for a system that was required on a new home.
Solar water heater or heat pump water heater in Hawaii?
Solar usually saves more electricity (Hawaiian Electric says it covers about 90% of hot water needs over a year) and has larger rebates, but it costs more up front and needs sunny roof space. A heat pump unit typically costs $1,700 to $2,500 plus installation, needs no roof, and gets a $500 to $700 rebate. See our heat pump guide for a side-by-side comparison.
What happens on cloudy days?
The system has an electric backup element. Hawaiian Electric says that during consecutive cloudy or rainy days the backup heats the water, and that the solar loop works during the solar day, about 9 a.m. to 3 p.m. A timer on the backup element helps keep it from running during the evening peak.
Sources
- Hawaii Energy: Water heating rebates (up to $2,750 solar instant rebate, up to $325 tune-up, Clean Energy Ally contractors, no combining; checked Oct 21, 2026)
- Hawaii Energy: Residential solar water heating instant rebate application, July 1, 2026 to June 30, 2027 (PDF) (rebate table by island and tank size, existing homes only, permit number required)
- Hawaii Energy: Solar water heater rebates increased (January 14, 2026) (tune-up rebates by county)
- Hawaii Energy: 2026-2027 rebates announcement (July 7, 2026)
- Hawaii Energy: Solar water heating (savings up to 40% for families of four or more, about $4,500 after rebate and state credit, Hot Water Cool Rates financing)
- Hawaii Energy: Solar water heater tune-up (every 5 years, systems at least 5 years old)
- Hawaii Energy: Solar water heater tune-up application (PDF)
- Hawaiian Electric: Solar water heating (how it works, ~90% of hot water needs, ~$9,200 average system; its example still shows a $2,000 rebate and 2025 federal credit)
- KIUC: Solar water heating programs ($1,500 rebate or zero-interest loan through Gather FCU, participating contractors)
- Hawaii State Energy Office: Renewable Energy Technologies Income Tax Credit
- Hawaii Department of Taxation: Announcement No. 2026-06 (Act 24: HSEO certification, $40 million annual cap, income limits from tax year 2027, credit ends after 2029)
- Hawaii Department of Taxation: Tax Information Release No. 2026-02 (July 31, 2026) (how the cap applies to 2026 systems)
- Hawaii State Energy Office: Executive Order 26-02
- Hawaii Department of Taxation: Form N-342 instructions (2025) (35% or $2,250 for a single-family solar water heater; rebates reduce the cost basis)
- Hawaii State Energy Office: State and federal incentives (federal 25D ends after Dec 31, 2025)
- Hawaiian Electric: October 2026 residential rates by island
- Hawaii DCCA: Hire a licensed contractor