SB2904

SECTION 1. The legislature finds that the use of fossil fuels to heat water is one of the most significant contributors to environmental pollution. Its use also perpetuates Hawaii's dependence on imported oil petroleum products.

The legislature further finds that solar energy is the most abundant renewable energy resource in Hawaii. Using solar energy for water heating is the best "clean" energy alternative for homes in the State. It will save four thousand eight hundred sixty tons of carbon dioxide per year. This is a significant reduction in the amount of human-made carbon dioxide emissions from burning fossil fuels, the primary culprit of greenhouse gas effect. In addition, using solar energy to heat water will save Hawaii thirty thousand seven hundred eighty barrels of oil per year, an average savings per household of almost five and a half barrels per year.

In addition, the use of solar energy devices for residential water heating will provide consumers with significant cost savings, compared to the use of traditional water heating devices that use petroleum products with unstable and increasing costs. Conventional electric water tanks account for ten to fifteen per cent of a home's electric bill. The cost savings from operating a solar water heater versus a conventional electric water heater will offset the higher cost of installation. In the case of a solar water heater, it is estimated that savings in utilities cost will pay for the new unit in three years. Furthermore, if the expenses for the installation are included in the mortgage payments of a new home, the savings from the lowered electric bill will be less than the additional monthly payment. For example, if the cost of installing a solar water heater is $6,000 for a thirty-year mortgage with a six per cent annual percentage rate, the monthly cost would equal $40 per month. In addition, cost savings for contractors and developers who can purchase in bulk may be passed on to new homeowners. This is when the cost of installing a solar energy device is the lowest. If every new home has a solar, gas or on-demand water heater then the State’s dependence on imported oil would be significantly reduced over time. In the case of a residence using solar energy, the greenhouse gas (carbon dioxide) saved over a fifteen year period would be twenty-seven tons or 54,000 automobile miles. In 2006, there were 5,700 new residences constructed; assuming that the number of new single-homes constructed remains relatively the same, this would amount to 10,260 tons of greenhouse gas saved per year.

The concept of mandating solar water heating is not new. Israel has had this policy in place since 1957, recognizing the need to be petroleum independent from their neighboring countries. In the United States, more than 1.5 million homes and businesses currently use solar water heating. These home and business owners realize not only the cost savings, but also the importance of keeping their local communities sustainable now and in the future. Hawaii would be able to invest $34.2 million annually into the state's local economy with the installation of solar water heaters into new home construction. This would also result in $550,000 annually that remains in the pockets of Hawaii taxpayer's, as opposed to the cost of exported oil. General excise tax generated from the sale of new solar water heaters would be approximately $1.5 million annually, more than off-setting any cost to the State.

The purpose of this Act is to increase the use of renewable energy to protect our environment, reduce pollution, make housing more affordable, and enhance Hawaii's local economy by requiring the installation of solar energy or comparable renewable energy devices for water heating in all new residential development projects and by expanding the tax credit to pre-existing homes constructed before January 1, 2010.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§196- Solar energy or comparable renewable energy devices required for new single-family residential construction. (a) Beginning January 1, 2010, solar energy or comparable renewable energy devices shall be installed as the primary system to heat water, in the construction of every new residential detached single-family residence, except when:

(1) Installation is impracticable due to building design or location of the building; or

(2) Installation is cost prohibitive; as determined by the county building code authority upon a letter submitted by the homeowner from an architect or engineer licensed under chapter 464 to the effect that paragraph (1) or (2) is applicable and the reasons therefor.

(b) Installation of solar energy or comparable renewable energy devices shall be in accordance with Hawaiian Electric Company's 100-point installation inspection or a comparable quality assurance standard. The contractor for each new detached single-family residence, condominium, and townhouse shall submit a written attestation to the department stating that the installed solar energy device is suitably sized for the number of people expected to occupy the dwelling and meets the department's quality assurance standards.

(c) The director of business, economic development, and tourism shall adopt rules pursuant to chapter 91 necessary for purposes of this section."

SECTION 3. Section 235-12.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) When the requirements of subsection (c) are met, each individual or corporate resident taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for every eligible renewable energy technology system that is installed and placed in service by a taxpayer during the taxable year. This credit shall be available for systems installed and placed in service after June 30, 2003. The tax credit may be claimed as follows:

(1) Solar thermal energy systems [~~for:~~] installed in:

(A) Single-family residential property: thirty-five per cent of the actual cost or $2,250, whichever is less; provided that beginning January 1, 2010, the tax credit shall be raised to forty-five per cent of the actual cost or $3,250, whichever is less, and shall apply only to residences originally constructed prior to January 1, 2010; all new homes constructed after January 1, 2010 shall not be eligible for the tax credit;

(B) Multi-family residential property: thirty-five per cent of the actual cost or $350 per unit, whichever is less; and

(2) Wind-powered energy systems for:

(A) Single-family residential property: twenty per cent of the actual cost or $1,500, whichever is less;

(B) Multi-family residential property: twenty per cent of the actual cost or $200 per unit, whichever is less; and

(3) Photovoltaic energy systems for:

(A) Single-family residential property: thirty-five per cent of the actual cost or $5,000, whichever is less;

(B) Multi-family residential property: thirty-five per cent of the actual cost or $350 per unit, whichever is less; and

provided that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.

In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a)."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2904
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII