Hawaii is a perfect environment for solar

water heating,” according to Alan Ikeda,

a Housing Management Specialist with

the Pacific Naval Facility Engineering Command

Housing Department in Pearl Harbor, Hawaii.

“The sun shines most of the time, we don’t have 

to worry about freezing, the state offers a 35%

solar tax credit, and our local utility supports the

purchase and installation of solar systems with 

generous rebates.”

The Hawaiian Electric Company’s (HECO’s)

$1,500 per unit rebate for solar water heaters

installed on new construction helped persuade the

Navy to take advantage of Hawaii’s solar resource

and install solar water heaters on family housing

units. At Moanalua Terrace, the Navy had demolished 752 units of family housing, which they are

rebuilding in four phases. Designers decided to 

use the opportunity to give the solar systems a try.

When the 100 homes in Phase I were built,

money was not available for solar water heaters.

However, Ikeda subsequently secured a $130,000

grant from the U.S. Department of Energy’s

(DOE’s) Federal Energy Management Program

(FEMP) to retrofit the Phase I homes with solar

systems. In retrofit applications, HECO rebates

$800 per unit ($80,000 total) on approved equipment, and Pearl Harbor Family

Housing will pay the difference

of the estimated $340,000 total

cost, or about $130,000.

The 136 units built during

Phase II of the Moanalua

Terrace project included solar

systems in their specifications,

so the Navy was able to take

advantage of the $1,500 per 

system HECO rebate for

approved solar water heaters 

in new construction. 

The Navy chose direct (openloop) active systems that circulate potable water through 

flat-plate collectors coated with a black chrome

selective surface. Each system consists of a 4-foot

by 8-foot (1.2-m by 2.4-m) collector made by

American Energy Technologies, Ltd., and an 

80-gallon (302-liter) Rheem tank containing an

electric backup element. 

Why solar water heating?

Federal agencies, including the military, administer more than 31% of the land area in the United

States. In many of these areas, high levels of sunshine make solar technologies a cost-effective

energy choice.

Solar water-heating systems offer Federal facility managers a number of advantages compared

with conventional water-heating appliances. For

one thing, solar water heaters are environmentally

benign—they consume no fuel and produce no

emissions. Solar water heaters can help Federal

facilities comply with 10CFR436 of the Code of

Federal Regulations (CFR) for Federal facilities,

which, as one of several compliance options,

requires that the life-cycle savings divided by the

initial investment (the savings-to-investment ratio,

or SIR) be greater than one. Solar water systems

can also help facility managers comply with

Hawaiian Electric Company/PIX07309

Each solar water-heating system at the Navy’s Moanalua Terrace housing 

project offsets about 1.7 tons (1.5 metric tons) of carbon dioxide, 8.2 pounds 

(3.7 kilograms) of sulphur dioxide, and 11.2 pounds (5 kilograms) of nitrogen

oxide every year.

A Solar Success Story at

Moanalua Terrace 

Solar systems prove to be the environmentally and economically

sound choice for heating water in U.S. Navy housing at Moanalua

Terrace in Pearl Harbor, Hawaii. 

Technical

Assistance

Detailed

Case Study

“Hawaii is a perfect

environment for solar

water heating.The

sun shines most of

the time, we don’t

have to worry about

freezing, the state

offers a 35% solar tax

credit, and our local

utility supports the

purchase and installation of solar

systems with

generous rebates.”

—Alan Ikeda, Navy

Housing Management

Specialist

“

U.S. Department of Energy

Office of Energy Efficiency

and Renewable Energy
Executive Order 12902, which requires increased water

conservation and reduced energy consumption in Federal

facilities and a significant increase in the use of renewable

energy technology to help achieve this goal. 

These devices also help reduce Hawaii’s dependence

on expensive imported oil, and save users money in the

bargain. For example, the Pearl Harbor Naval Station has

no other energy option for heating domestic hot water

except electricity, which currently costs $0.11 per kilowatt-hour. On a life-cycle cost basis, the solar systems are

much less expensive than conventional electric water

heaters or heat pumps—even without the HECO rebate! 

Projects such as Moanalua also benefit solar energy

technologies by helping to expand the market for solar

water heaters and by fostering familiarity with the technologies among the users. At Moanalua, including the 

516 homes now under construction in Phases III and IV

and the 100 homes in Phase I that have been retrofitted,

this translates to 752 families using solar systems to heat

their water. 

These projects also offer a public education opportunity. In the case of the Moanalua project, the local utility 

and the local solar industries association joined forces to

present educational programs on the benefits of solar

water-heating systems.

Selling solar

From a facility manager’s perspective, solar water

heaters do present challenges compared with electric

water heaters. They are more expensive to purchase, more

complex to install and maintain, and—perhaps most

important—residents and maintenance personnel are

often unfamiliar with the technology.

In addition, some Federal managers are resistant to

considering solar water heaters because of past bad experiences. The solar water-heating industry experienced 

failures and bad press in the 1980s, but the situation is

very different today. The solar companies that survived

the demise of the Federal residential tax credits in 1985

continued to refine their products. They now sell systems

based on mature, reliable, proven technologies. In addition, the Solar Rating and Certification Corporation, a

nonprofit national corporation, develops certification programs and rating standards for solar energy equipment.

Most collectors carry 10-year warranties, and systems

should last at least 20 years.

In many applications—including the Moanalua 

installations—modern solar water-heating systems have

economic advantages over conventional water-heating

systems. At Moanalua, the solar water heaters’ life-cycle

costs are lower than those of either a conventional electric

water heater or a heat pump, and, after the payback 

period, the solar system continues to produce hot water 

for only the cost of maintenance. Solar water heaters also

come in different configurations that can be matched to 

specific applications to maximize efficiency and costeffectiveness. Solar water heaters’ many advantages 

make any resistance worth overcoming. 

Economics

The Navy had originally planned to use highefficiency electric water heaters in its new and renovated

family housing, but decided on solar water heaters

because of HECO’s Residential New Construction 

Rebate and Residential Efficient Water Heating Rebate

Programs. As the Navy’s research revealed, solar water

heating is a particularly attractive choice in Hawaii,

because of that state’s unique circumstances. 

Almost 90% of Hawaii’s power comes from imported

oil, and Hawaii utilities are required by law to pass on 

fuel price increases within 30 days. If oil prices increased

suddenly, the shock to Hawaiian consumers would be

almost immediate. Hawaii burns about 2.1 million barrels

of oil per year (more than 5,000 barrels per day) to heat

domestic water, and solar water heaters can significantly

reduce this environmental and economic burden. For

example, the 50,000 solar water-heating systems currently

operating in Hawaii avoid the burning of more than

350,000 barrels of oil each year. A typical Hawaiian 

family of four can avoid the burning of seven barrels of 

oil per year by installing a solar water-heating system.

The criteria set forth in 10CFR436 require that the 

SIR be greater than one. The definition of cost-effectiveness established in President Clinton’s Executive Order

12902 is that systems have simple payback periods of 

less than 10 years. 

According to the Navy’s Ikeda, “An analysis of the

economics of solar water heating at Moanalua shows that

solar water heating is a better investment than either heat

pumps or electric water heaters with or without the rebate

over a 20-year period.” Although the solar systems are

more expensive to buy and install initially, they use far

less energy to operate during a 20-year period. Even without the rebate, the Moanalua systems have a simple payback period of about 10 years and an SIR of 1.4. With the

HECO rebate of $1,500 per solar water-heating system,

the simple payback is about six years and the SIR is 2.5.

Throughout a 20-year life cycle heat pumps are more

cost effective than electric water heaters, but far less cost

effective than solar water heaters. According to the Navy’s

research, even with an HECO rebate of $725 per unit, heat

Hawaiian Electric Company/PIX07310

At Moanalua Terrace, the Navy’s analysis revealed that solar water

heaters were more cost effective than either high-efficiency electric

water heaters or heat pumps.
pumps have a simple payback of more than 40 years and

an SIR of only 0.67. 

Performance

To ensure eligibility for the HECO rebate, solar water

heaters must provide 90% of the average annual waterheating load, perform consistently throughout the life of

the system, and have an estimated useful life of at least

15 years. Both the Navy and the residents are satisfied

with the performance of the solar systems at Moanalua. 

Initially, residents complained that they didn’t have

enough hot water because the utility only allowed the

backup element to come on for one hour per day.

However, since the timers were adjusted to allow the

backup elements to operate for a maximum of 2 hours 

per day, there have been no complaints.

Leaving a legacy

Protecting the environment is everyone’s job, and

renewable energy technologies make that possible with

reliable, cost-effective equipment. Some businesses and

government agencies are beginning to base development

decisions on life-cycle cost analyses, which include the

cost of operating and maintaining installations throughout

their anticipated service life. This is good news for renewable energy technologies, because although they are 

typically expensive to purchase, they require minimal

maintenance, no fuel, and produce no emissions, which

makes them a good long-term investment. 

At Moanalua, solar water heaters are the most economical water-heating option, even without the utility rebate.

If we include the estimated costs of avoided emissions in

the mix, a good investment looks even better. Based on 

the U.S. Environmental Protection Agency’s Emission

Factors for calculating emissions offsets, each solar system at Moanalua offsets about 1.7 tons (1.5 metric tons) 

of carbon dioxide, 8.2 pounds (3.7 kilograms) of sulphur

dioxide, and 11.2 pounds (5 kilograms) of nitrogen 

oxides every year. According to the National Park

Service’s assignment of costs to those emissions offsets,

this amounts to an additional annual dollar savings of

$72.77 per unit. Multiplied by the 136 units in Phase II 

of the Moanalua project, the savings is almost $10,000 

per year. 

By using solar water heaters to provide hot water for

family housing, the Navy demonstrates environmental

awareness and good financial management. Other Federal

agencies can realize the same benefits by following the

Navy’s good example at Moanalua Terrace. ◆

20-Year Life-Cycle Cost Analysis

Including HECO rebate:

Basecase Solar System Savings

(electric) (90% solar fraction) (per unit)

INITIAL INVESTMENT 

Incremental Cost/Unit $400 $2,310 -$1,910

FUTURE COSTS 

Recurring Costs* $659 $741 -$82

Energy Costs** $5,352 $539 +$4,813

TOTAL PRESENT VALUE $6,411 $3,590 $2,821

*Includes maintenance and capital replacement costs discounted over 20 years using the National Institute

of Standards and Technology’s (NIST’s) 1998 discount rate of 4.1%.

**Based on the U.S. Department of Energy’s (DOE’s) projected energy prices for electricity in DOE Region 4.

Savings-to-investment ratio (SIR) = 2.5

Simple payback = 6 years

Discounted payback = 7 years

Note that this analysis includes a $1,500 per unit rebate from the Hawaiian Electric Company and does not

include the costs associated with emissions produced by the utility company to generate electricity.

Analysis performed using NIST’s Building Life-Cycle Cost (BLCC) software tool.

MOANALUA PHASE II ANNUAL AVOIDED 

EMISSIONS COST ESTIMATES*

Avoided Emissions** Cost of Avoided Emissions***

CO2 1.7 tons (1543 kilograms) $23.80

SO2 8.2 pounds (3.7 kilograms) $6.97

NOx 11.2 pounds (5.1 kilograms) $42.00

Annual Value of $72.77

Avoided Emissions 

*Per unit, compared with an electric water heater.

**Based on the U.S. Environmental Protection Agency’s Regional Emission Factors.

***Based on the National Park Service (NPS) assignment of costs to emissions, revised 9/97.

NPS Assignment of Emission Costs

CO2 $14/ton ($0.015/kilogram)

SO2 $0.85/pound ($1.88/kilogram)

NOx $3.75/pound ($8.33/kilogram)

Note that this analysis does not include the cost of emissions produced by generating the electricity to run

the pumps on the solar systems.

Project Description: Solar water-heating systems installed on

136 units of new Navy housing

Location: Oahu, Hawaii

Design: R&R Solar Supply, Honolulu, Hawaii

Installation: Dorvin D. Leis Company, Inc.

Collector: AE-32 from American Energy Technologies, Ltd.

Pump: PACO 006B 

Controls: Heliotrope DTT94 

Tank: Rheem 81VTCR80-1 80-gallon (302-liter) top connect

Moanalua Project Details
Produced for the U.S. Department 

of Energy (DOE) by the National

Renewable Energy Laboratory, 

a DOE national laboratory

DOE/GO-10099-671

March 1999

Printed with a renewable-source ink on 

paper containing at least 50% wastepaper,

including 20% postconsumer waste

For More Information

Alan I. Ikeda

Department of the Navy

Housing Division

Pacific Division

Naval Facilities Engineering Command

Code 08, Building 550

Pearl Harbor, Hawaii 96860-7300

(808) 471-2597

Fax (808) 474-5972

e-mail: aikeda@efdpac.navfac.navy.mil

Sandra Haughton

Hawaiian Electric Company

P.O. Box 2750 

MS CP13-SF

Honolulu, Hawaii 96840-0001

(808) 543-4617

e-mail: shaughto@hei.com

Rolf Crist

R&R Solar Supply

1916 Democrat Street

Honolulu, Hawaii 96819

(808) 842-0011

Fax (808) 845-4047

American Energy Technologies, Ltd.

P.O. Box 1865

Green Cove Springs, Florida 32043

(800) 874-2190

(904) 284-0552 

Fax (904) 284-0006

e-mail: solardell@aol.com

Web site: www.solarenergy.com/aet

Jim Huggins

Solar Rating and Certification Corporation 

1679 Clearlake Road

Cocoa, Florida 32922-5703

(407) 638-1537

Building Life-Cycle Cost (BLCC) software tool is available at

http://www.eren.doe.gov/femp/techassist/softwaretool/

softwaretools.html

This case study is available on the FEMP Web site 

(http://www.eren.doe.gov/femp) and from the 

FEMP Help Desk (1-800-363-3732).

For More Information

FEMP Help Desk:

(800) DOE-EREC (363-3732)

Fax: (202) 586-3000

Internet: http://www.eren.doe.gov/femp

Anne Sprunt Crawley

Team Leader, Technical Assistance

DOE FEMP, (202) 586-1505

Federal assistance for renewables is

provided through the following national

laboratories in support of the U.S.

Department of Energy’s Federal Energy

Management Program

National Renewable Energy Laboratory 

Andy Walker, (303) 384-7531

Nancy Carlisle, (303) 384-7509

Patrina Eiffert, (303) 275-3066

Sandia National Laboratories

David Menicucci, (505) 844-3077