‘Wholesale’ exemptions undercut solar water heater mandate, judge rules

A court ruling in support of a state law requiring all new homes be built with solar water heaters has led to a temporary halt to exemptions allowing installation of gas water heaters instead.

Clean-energy advocates hailed a decision early this month by First Circuit Court Judge Jeffrey Crabtree that the state Department of Business, Economic Development and Tourism had wrongfully been allowing “wholesale” exemptions from the solar water heater mandate that was enacted 11 years ago.

The decision is considered a hard-fought victory for groups like the Hawaii Solar Energy Association, which said DBEDT was rubberstamping nearly 100 percent of all variance requests for tankless gas water heaters.

“Closing this exemption represents a massive victory for common sense and clean energy in Hawaii,” said Will Giese, executive director of HSEA in a news release. “Solar water heating is a no-brainer solution, which is why it was mandated in the first place, and it generates huge upside benefits for Hawaii residents well into the future.”

To date, Giese said, DBEDT has granted more than 6,500 exemptions, and developers of several large Oahu subdivisions, encompassing about 15,000 homes, are in line for them. These include Ho‘opili in Ewa Beach and Koa Ridge on the slopes of central Oahu, which he said are ideal locations for solar water heaters.

Alan Yonan, State Energy Office spokesman, said DBEDT and the state attorney general are reviewing the ruling and will evaluate options that address the concerns of all parties. DBEDT also will be following the state attorney general’s guidance on how to proceed.

In the meantime, DBEDT is no longer accepting variance applications for tankless gas water heaters and has posted a notice on its frequently asked questions link saying it would be waiting for guidance from the court’s final order.

“DBEDT was making a good-faith effort to follow the statute, which includes tankless gas water heaters as one of four options available for applicants seeking a solar water heater variance,” Yonan said in an e-mail.

The upfront costs of a tankless gas heater, at about $1,500, are more affordable than a solar water heater at about $6,000. But the solar water heater, which is eligible for state and federal tax credits, pays for itself over time due to energy cost savings, advocates said.

Earthjustice attorneys filed suit on behalf of HSEA and the Sierra Club of Hawaii, arguing that DBEDT’s exemptions for fossil-fuel powered gas water heaters were contrary to the law’s purpose of promoting the environmental and consumer benefits of solar water heating.

The Legislature’s intent, Earthjustice argued, was for variances to be considered on a case-by-case basis and “rarely, if ever, exercised or granted.”

“The court’s ruling clarifying DBEDT’s discretion to deny gas variances vindicates the original intent of the solar water heater mandate and helps Hawaii fulfill its leadership role in achieving a clean energy future,” said Earthjustice attorney Leina‘ala Ley in a statement. “Blanket exemptions for fossil-fuel infrastructure never made sense, and are simply untenable in today’s time of climate crisis.”

The mandate, which went into effect in 2010, requires all new single-family homes be built with solar water heater systems. Numerous exemptions are available, however, including if the home is not in a sunny area, if another renewable-energy system such a photovoltics or solar thermal is used to heat water or if a life cycle cost-benefit analysis shows the installation is too expensive. A tankless gas heater also may be installed if a gas appliance is in the home.

DBEDT records indicate exemptions over the past decade have been granted primarily for gas heaters for new homes on every major island, from Kauai to the Big Island.

Past legislative bills attempted to close the loopholes. One introduced this session — House Bill 557 — would have required stricter criteria and the ability to impose fines for false statements on applications, but is no longer scheduled to be heard in the Judiciary Committee.

Marco Mangelsdorf, president of Hilo-based ProVision Solar, called the judgment “a superlative ruling.”

“There were too many exemptions granted,” Mangelsdorf said in an e-mail. “We need to continue to make as rapid progress as we can toward the ambitious renewable-energy rules that our state has set.”

When homeowners request a solar photovoltaic system, his company strongly recommends the installation of a solar water heater system first, if not already present.

DBEDT’s failure to properly review variance requests, said Giese, has cost Hawaii’s local solar industry an estimated $36 million in economic and job benefits, and Hawaii homeowners millions of dollars in energy savings. It also runs counter to the state’s goal of achieving 100 percent renewables by 2045.

Sierra Club director Marti Townsend said in a statement: “This ruling is powerful because it enables Hawaii to follow through on its commitments to protect our environment and climate. We know that gas-fueled water heaters are more polluting and more costly than solar alternatives, and we should have phased them out of new home construction years ago. This future starts today.”