Hawaii’s clear skies and sunny days make for perfect conditions to take advantage of solar power.

Homeowners who generate their own electricity through solar photovoltaic (PV) systems may reduce our state’s reliance on imported fossil fuels and see savings on their electric bills, too.

According to the U.S. Energy Information Administration, Hawaii residents pay 23.87 cents per kilowatt-hour (more than double the national average of 10.41 cents/kWh) for electricity. When local homeowners switch to solar, they could see a quicker return on their investment because of this. As with any large financial investment, you should weigh the costs and benefits before installing a PV system. Here are some things to consider before you go green.

Reduce energy consumption

A reputable solar contractor will size your PV system to your energy needs. If your electric bill is $500 a month, you’ll need a larger system to offset your energy consumption than a person whose bill is $200 per month. If your system is too small, you’ll find yourself continuing to pay a large portion of your electric bill.

Before you get a PV system, it helps to make your home as energy efficient as possible. Switching to LED lightbulbs is a quick and easy way to use less energy. Energy-efficient appliances have a higher price tag, but if you’re due for a new fridge or hot water heater, look for one that’s Energy Star approved — you may even qualify for a rebate from Hawaii Energy.

Finally, lifestyle changes can help reduce your energy consumption. Remember that appliances use a lot of energy to generate heat or cool things down. Use fans instead of air conditioning, take shorter hot showers, wash your clothes in cold water and hang laundry to dry to lower your electric bill.

How to pay for a PV system

Not many people can pay for a $20,000 PV system in cash. Fortunately, many financial institutions offer PV and solar loans to help Hawaii homeowners become energy efficient.

Once your PV system is connected to the grid, you may begin to see a reduction in your electric bill. The money you save on electricity can instead go toward your loan payments.

What are the tax benefits?

When you purchase a PV system, you may be able to claim a federal tax credit of up to 30 percent (no maximum limit) and a Hawaii tax credit of up to 35 percent ($5,000 maximum limit).

This is not to be confused with a tax deduction or tax rebate, a tax credit allows you to reduce your tax liability, or the amount of taxes you owe.

If you receive a $5,000 state tax credit but only owe $3,000 in taxes, you may not receive a tax return of $2,000, but you may be able to carry over the extra credit to the following year. Check with your tax advisor to see if you qualify for any tax benefits.

Preparing your home for PV

Most PV systems sit on a home’s south- or west-facing rooftop. Before your solar contractor proceeds with installation, look for anything that may obstruct panels or cause damage. Consider trimming tree branches that are shading the roof, and relocating satellite dishes or antennas.

Make sure your roof is in good condition without damaged shingles or leaks. Solar panels last for 20 to 25 years. If your roof will need to be replaced in the next 10 years, you might want to get that work done before putting anything on it.

With optimal conditions, your new PV system may help you reduce your energy footprint and your electric bill for years to come.

Jennifer Russo is the financial educator at Hawaii State Federal Credit Union.