Bigger tax credits energize solar power business

Pacific Business News (Honolulu)
May 29, 2006

by Nina Wu Pacific Business News

A combination of higher electricity costs and bigger tax credits is making Hawaii's solar business more lucrative.

It's also a good time for solar contractors to expand.

Bruce Ekimura, owner of Alternate Energy on Sand Island Road, opened a second location in Kahului, Maui, earlier this month to field additional clients. The 13-year-old business that provides solar water heaters, primarily for homes, will begin offering photovoltaics and court more commercial clients.

In addition to federal tax credits, new state legislation increases credits for those installing solar equipment in commercial buildings and homes. The bill passed by the Legislature and awaiting Gov. Linda Lingle's signature also makes the tax credits permanent.

Single-family homes installing photovoltaic energy systems would qualify for up to $5,000 in tax credits, up from $1,750. Commercial properties would qualify for up to $500,000 in credit, up from $250,000.

Homes investing in solar thermal energy systems would get either 35 percent of the actual cost back or $2,250.

The bill also establishes a "pay-as-you-save" program to be implemented by June 30, 2007. It would allow consumers to make incremental payments for a solar water heating system on their utility bills.

"The intent is to help people move away from dependence on fossil fuels and encourage the use of renewable sources of industry," said Sen. J. Kalani English, D-East Maui-Molokai-Lanai, sponsor of the legislation. "It helps encourage consumers and homeowners to invest in these types of systems."

Demand already is rising and solar contractors and solar-related companies are expecting the momentum to continue as state tax credits kick in.

Guy Akasaki is betting on integrated photovoltaic solar roofing as the hottest wave of the future. The owner of Commercial Roofing + Waterproofing Hawaii Inc. invested about $350,000 in solar panels and training. He will target commercial and industrial clients, particularly on the Neighbor Islands. Among potential clients are large firms, supermarkets and transportation companies.

A&B Properties Senior Vice President Paul Hallin said his company has been exploring its options.

"It appears this law -- with its tax credits -- would cause us to push even harder to cost-justify solar water heating or photovoltaic in both single-family residential and commercial construction," he said.

A&B Properties currently has residential and commercial developments on Maui, Kauai and the Big Island.

"It makes business sense," Akasaki said. "If it was only good for the environment and not economically feasible, we wouldn't do it. With the price of fuel increases, the feasibility of these systems will kick in."

The new state credits complement higher federal tax credits that went into effect beginning this year, offering 30 percent returns for solar water heating systems.

Malie Apo, an estimator for Honolulu-based Poncho's Solar, which has been in the business since 1988, said new construction has boosted activity over the last 18 months. Poncho's works in partnership with several contractors, including Armstrong Builders, Graham Builders and Sutton Construction.

At the company's Upcountry Maui office, established two years ago, Poncho's Solar is hiring more help to meet the new demand there.

The average family home could invest $30,000 to $58,000 on solar equipment, depending on the size of the system, Apo said. But with all the credits available, they can expect more than half of the costs to be returned.

Homes on Maui and the Big Island can expect up to $1,000 in solar water heater rebates, compared to $750 on Oahu.

nwu@bizjournals.com | 955-8038

© American City Business Journals Inc.

Original article URL: http://pacific.bizjournals.com/pacific/stories/2006/05/29/story4.html?t=printable

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