The Economic and Fiscal Impacts of Hawaii s Solar Tax Credit

Thomas A. Loudat and Prahlad Kasturi
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Thomas A. Loudat: President, Tal Associates, 46-281 Auna Street, Kaneohe, HI 96744, USA,
Prahlad Kasturi: Department of Economics, Radford University, Radford, Virginia, USA.

International Journal of Energy Economics and Policy, 2017, vol. 7, issue 1, 224-252

Abstract: This research paper assesses the economic and fiscal impacts of Hawaii s solar tax credit-stimulated solar installations. The method entails estimating the economic effects created by (i) the purchase of a solar system as well as, (ii) of the alternatives foregone. Our study shows that the State receives full repayment of its solar credit investment in 9-15 years. For each solar credit dollar spent, the State receives $1.97-$2.67 dollars in additional tax revenues. The fiscal results of the tax credit reported by this research have been replicated in a federal solar tax credit study published by the US Partnership for Renewable Finance USPRF (2012) that estimates an internal rate of return (IRR) of 10% for the government s tax credit investment in residential solar systems. The findings of the federal study comports closely with our Hawaii s estimate of an IRR of 9.5% for residential and 11.1% for commercial solar systems.

Keywords: Solar Energy; Solar Tax Credit; Internal Rate of Return (search for similar items in EconPapers)
JEL-codes: O4 (search for similar items in EconPapers)
Date: 2017
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