In June 2008, Hawaii enacted legislation, SB 644, with the intent to require solar water-heating (SWH) systems to be installed on all single-family new home construction, with a few exceptions. This legislation had several errors that were corrected by legislation passed during the 2009 legislative session. In June 2009, HB 1464 was signed by the governor and addressed the errors in the previous solar water heating requirement.

As of January 1, 2010, building permits may not be issued for new single-family homes that do not include a SWH system. The state energy resources coordinator may provide a variance for this requirement if:

• Installation is impracticable due to poor solar resource;
• Installation is cost-prohibitive based upon a life cycle cost-benefit analysis that incorporates the average residential utility bill and the cost of the new SWH system with a life cycle that does not exceed 15 years;
• A renewable energy technology system is substituted for use as the primary energy source for heating water; or
• A demand water heater device approved by UL is installed; provided that at least one other gas appliance is installed in the dwelling. (A "demand water heater" means a gas-tankless instantaneous water heater that provides hot water only as it is needed.)

The legislative intent is that the demand water heater provision should only apply if the variance applicant is the individual that will be paying for the energy costs (the homeowner). A variance is automatically granted if not approved within 30 days or if a Hawaii licensed architect or mechanical engineer attests to one of the allowed exemptions. In June 2010, SB 2563 gave the Department of Business, Economic Development, and Tourism the authority to charge a fee for the cost associated with administering variances. If any fees are collected, they will be deposited into a special fund.

The Hawaii Public Utilities Commission must adopt specifications for the required performance, materials, components, durability, longevity, proper sizing, installation and quality of solar water heaters.

Significantly, SB 644 rescinded the state income tax credit for residential SWH installations on new homes issued a building permit after December 31, 2009. HB 1464 eliminated the tax credit for wind systems used to get a SWH variance and reduced the tax credit available to photovoltaic systems used to get a SWH variance. For more information, see Hawaii's Solar and Wind Energy Tax Credit.