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The Economic and Fiscal Impacts of Hawaii’s Solar Tax Credit


  • Thomas A. Loudat

    (President, Tal Associates, 46-281 Auna Street, Kaneohe, HI 96744, USA,)

  • Prahlad Kasturi

    (Department of Economics, Radford University, Radford, Virginia, USA.)


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.

Suggested Citation

  • Thomas A. Loudat & Prahlad Kasturi, 2017. "The Economic and Fiscal Impacts of Hawaii’s Solar Tax Credit," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 224-252.
  • Handle: RePEc:eco:journ2:2017-01-24

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    More about this item


    Solar Energy; Solar Tax Credit; Internal Rate of Return;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity


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