The state tightens rules on solar tax credits - Hawaii News Now - KGMB and KHNL

The state wants to curtail a clean energy tax break that will cost more than $174 million this year.

But the move is prompting dire warnings from an industry that's been thriving.

The new rules go into effect Jan. 1. From then on solar systems will be defined by kilowatt output to effectively provide one $5,000 tax credit per household.

"We don't want to focus on how to game the system. We want to focus on a system that treats everyone fairly," Gov. Neil Abercrombie said.

But environmentalists and businesses say the move will result in the loss of hundreds of jobs in one of the fastest growing industries in the state.

"With this dramatic, overnight change in the credits, we're going to see businesses going bankrupt, people out of work and a lot less economic activity in the solar industry," said David Henkin, attorney for Earthjustice.

"Any way you look at these new rules -- whether it's an economic matter or an environmental matter -- they are a bad idea."

The new rules are particular hard on large, utility-scale projects that are now being built to provide electricity for local power companies.

"For some of our clients, it will have an impact. We're churning through our information so we can proactively reach out to them. Our employees are worried as well," said Mark Duda, principal at RevoluSun, which specializes in larger commercial solar projects.

Hawaii's solar panel industry accounts for nearly one in every five construction jobs in the state and the state's tax credits are a major reason behind this growth.

Reducing the credit will make solar less affordable for families and small businesses.

But Abercrombie says too many people have been taking advantage of the poorly written law that's forced the state to pay for the credits with money meant for social programs and other state projects.

"Then, we can get back to the real question which is not whether or not you're going to get the credits," he said.

"The question is whether some people are getting more than they're entitled to."

The tax rules are temporary. Environmentalist and clean energy advocates will likely to seek legislation to reverse the move.

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