Seawater air-conditioning project for Honolulu buildings clears last major regulatory hurdles

A really, really big plastic straw for sucking up sea water several miles off Kakaako might be ready for deployment next year as part of a system to air-condition 40 or so buildings mostly downtown.

The developer of the $250 million system recently obtained its last major regulatory approval for the project, first announced in 2004.

Honolulu Seawater Air Conditioning LLC reached an agreement earlier this year with the state Department of Land and Natural Resources on how to minimize and mitigate disruptions to coral and rock supporting marine life in the path of its planned 4.7-mile pipeline tapping 44-degree sea water from 1,755 feet below the ocean surface.

“All of the major permits that are needed for us to proceed have been secured,” said Eric Masutomi, Honolulu Seawater CEO.

The company still needs a few more customer commitments before it can access financing, but the city is expected to sign up municipal buildings by the end of this year or early next year so long-delayed construction can begin.

Construction, which includes the offshore pipeline, a central plant and distribution lines to buildings, is expected to take 18 to 20 months and be finished in 2022, Masutomi said.

The agreement with DLNR requires that Honolulu Seawater relocate some coral affected by a 63-inch-diameter intake pipe and 54-inch-diameter return pipe.

The pipeline is designed to deliver cold sea water to a land-based heat-exchange plant where fresh water is chilled and sent to individual building air conditioning systems via distribution lines laid beneath streets. Leftover warmed sea water in the heat exchanger is then pumped back into the ocean.

An initial 1,600 feet of offshore intake and return piping will be housed in a tunnel drilled beneath the seafloor before connecting to a short stretch of return pipe and longer intake pipe anchored to the seafloor using up to 952 concrete footings, each of which covers 3.6 square feet to 76 square feet of ground area. A 160-square-foot area also will be disturbed where the tunneled pipes connect with the exposed pipes.

Based on surveys, Honolulu Seawater estimates that it will displace 86 square feet of coral and 11,577 square feet of rock supporting marine life. The company will use a marine biologist and engineers to pick a path of least disruption and will relocate coral in the tunnel exit area to nearby sites. Nearly all the coral affected by footings is within the first half-mile of pipe on the seafloor, according to the agreement.

Local government officials have endorsed the project because it will reduce electricity and potable water use while also producing less wastewater compared with traditional air conditioning systems in large buildings.

“The engineering design and deep water pipeline installation has been proven to be feasible, reliable and economical,” DLNR said in a 2011 report that noted similar systems exist in Sweden, Hong Kong, Canada, the mainland and at the Natural Energy Laboratory of Hawaii Authority on Hawaii island.

Work on the Honolulu project, however, has dragged on for 15 years.

An affiliate of Minnesota- based Ever-Green Energy announced the project in 2004.

The firm said its system could cut air conditioning costs for building owners by up to 75% and eliminate 77 million kilowatt-hours of electricity use annually — enough to power about 13,000 homes.

Ever-Green also said the system would cut potable water consumption by more than 260 million gallons and reduce carbon dioxide emissions by 84,000 tons a year, or the equivalent of removing 15,000 cars from Honolulu streets.

Initially, Ever-Green anticipated it could have the system running by mid-2007. But efforts to obtain financing, customers and regulatory approvals proved daunting.

A “breakthrough” was announced in 2008 when Honolulu Seawater said it raised $10.75 million in private financing. But the company also acknowledged that permitting obstacles still lay ahead.

“The permits are going to be a problem, but we feel very much that that’s under control,” William Mahlum, an Ever-Green official and then-chief executive of Honolulu Seawater, said at the time.

Over the next few years, Honolulu Seawater produced an environmental impact statement, obtained permits governing clean-water and conservation district use, received state approval to issue $145 million in tax-exempt revenue bonds and signed a 55-year lease with Kamehameha Schools for the heat-exchange plant site makai of the former Gold Bond Building.

In 2012 the company said it expected to start construction that year, but this was also premature.

Ulupono Initiative, an investment firm headed by billionaire eBay founder and Hawaii resident Pierre Omidyar, helped keep the project moving forward by acquiring majority ownership of Honolulu Seawater in 2014, which is also when Mahlum was replaced by Masutomi, a former state planner and Outrigger Enterprises executive.

Signing up enough customers is now the company’s last major hurdle.

A big advance on this front happened last year when the state finalized a deal to use the system to air-condition eight downtown buildings including the state Capitol. Ten other buildings also have signed up, including The Queen’s Medical Center, Hawaiian Electric Co., the University of Hawaii John A. Burns School of Medicine, First Hawaiian Bank, the federal courthouse and One Waterfront Towers.

Mayor Kirk Caldwell announced Thursday that the city will connect its municipal buildings in the downtown/civic center area to Honolulu Seawater’s planned system.

Masutomi said customer agreements, not including the city’s intended move, cover a little more than half the system’s capacity. To access financing, about two-thirds of the supply must be booked. Masutomi said this mark should be achieved, thanks to the city, so that financing can be locked up by the end of this year or early next year and allow construction to finally begin.

“It’s been a long journey,” he said. “Despite the long journey, we are beginning to see the light at the end of the tunnel, so to speak.”