International market
2026-10-22Introduction: 2026 年 10 月 16 日, the U.S. Environmental Protection Agency (EPA) announced a 1.09 亿 USD WIFIA loan to the Honolulu Board of Water Supply for the design and construction of the Kalaeloa Desalination Plant—which will be the first desalination facility on Oahu, Hawaii. The facility adopts Reverse Osmosis / RO process, with a daily production of 170 万 gallons. The project scope includes byproduct disposal facilities, Reclaimed Water pipelines, and water transmission mains, with the goal of reducing extraction pressure on the groundwater aquifer.
What Is WIFIA: The Operating Logic of Federal Low-Interest Loans
WIFIA stands for Water Infrastructure Finance and Innovation Act, a federal loan program established by the U.S. Congress through legislation in 2014 年 and administered by the EPA, specifically providing long-term, low-cost supplemental credit support for large water infrastructure projects of regional or national significance.
Two aspects of its mechanism design are noteworthy:
- Subordinate lien—the Honolulu Board of Water Supply chose to structure this loan as a subordinate lien, meaning its repayment priority is subordinate to senior lien bonds, providing the borrower with greater repayment flexibility;
- Deferred principal during construction—the Board will utilize a construction-period deferred principal repayment arrangement to reduce the short-term impact on water rates, avoiding water price increases before the project is even operational.
Together, these two arrangements address the most common deadlock in water utility projects: huge investment, long payback period, but costs ultimately falling on residents' water rates. By sharing costs through federal low-interest funding, the full lifecycle cost of the project is leveled out, and political acceptability is significantly enhanced.
The EPA states that the WIFIA program currently has up to 110 亿 USD in available capacity for water systems to apply, plus another 30 亿 USD for state-level infrastructure financing institutions, and is accepting letters of interest. EPA Assistant Administrator for Water Jess Kramer noted that communities across the country face multiple challenges—from replacing aging pipes and pumps, to upgrading services to support growth, to developing new water sources—and WIFIA is an important tool to help communities complete such investments.
Why Desalination: The Structural Vulnerability of Island Water Systems
The Honolulu Board of Water Supply serves parts of Oahu. The vulnerability of island water systems is structural: nearly all freshwater comes from groundwater aquifers, and recharge depends on rainfall. Once rainfall decreases or aquifer over-extraction leads to seawater intrusion, water supply security loses its buffer.
Desalination in this scenario is an "insurance-type" water source: unaffected by rainfall, predictable in capacity, and capable of long-term stable supply. But the cost is energy consumption and brine disposal. Therefore, the EPA's statement juxtaposes "reliable" with "renewable"—seawater as a source is infinitely available on the island, giving desalination a "climate-resilience" attribute similar to Reclaimed Water.
It is worth noting that this project is not limited to desalination. The project scope explicitly includes Reclaimed Water pipelines—indicating that the local approach is a multi-source portfolio strategy: desalination supplements drinking water supply, Reclaimed Water substitutes for non-potable uses, and together they reduce dependence on the groundwater aquifer. Ernest Lau, Manager and Chief Engineer of the Honolulu Board of Water Supply, stated that this financing will help build the island community's first desalination facility.
Three Project Design Lessons Worth Borrowing
For domestic water utility projects, the value of this case lies not merely in "the U.S. built a desalination plant," but in its project structure and portfolio approach:
- Seawater desalination and reclaimed water built under the same package — water sources of different qualities are allocated by use in a tiered manner: drinking water from seawater desalination, non-potable and landscape uses from reclaimed water, avoiding the waste of "meeting all demands with the highest-quality water." This is fully consistent with the domestic approach of dual water supply and using the best water for the best use;
- By-product disposal designed upfront — the project scope includes dedicated by-product disposal facilities, indicating that brine disposal in seawater desalination projects is no longer an ancillary add-on, but a mandatory item designed and invested in synchronously with the main works;
- Financing structure linked to tariff impact — the combination of a subordinate lien plus deferred principal during construction is aimed at smoothing the water tariff impact. Domestic water projects using special bonds and green credit likewise need to align repayment节奏 with project commissioning节奏, avoiding passing construction-period cash flow pressure on to end-user water tariffs.
Groundwater Protection: An Underestimated Policy Goal
In its announcement, EPA repeatedly emphasized that the project will "reduce pressure on groundwater aquifers." The technical meaning of this statement deserves elaboration.
Once coastal groundwater aquifers are over-extracted, seawater intrudes inland along the aquifer, causing well water salinization and irreversible aquifer degradation. In such cases, restoration costs far exceed prevention costs. Therefore, introducing seawater desalination and reclaimed water as alternative water sources is essentially "reducing the burden" on aquifers — allowing groundwater to retreat from a primary source to a strategic reserve.
This logic also holds domestically. In recent years, over-extracted groundwater areas such as North China have implemented extraction reduction through water diversion plus reclaimed water recharge, with results already reflected in monitoring data; coastal cities face seawater intrusion risks. Honolulu's approach provides a reference indicator framework: using "decline in aquifer extraction" rather than "new water supply capacity" as the project performance indicator.
The Position of Reclaimed Water
This project includes reclaimed water pipelines — a detail easily overshadowed by the halo of seawater desalination, but potentially the more critical part in the long run.
The reason is simple: seawater desalination costs more than reclaimed water and consumes more energy. In an island water system, the rational configuration should be "reclaimed water preferentially replaces all non-drinking demand, seawater desalination only fills the drinking water gap." As the share of reclaimed water in industrial and municipal non-potable uses increases, the scale requirement for desalination plants will decline accordingly, optimizing overall energy consumption and cost. This is why EPA describes the project as a combined investment that both "improves water supply reliability" and "protects public health."
For domestic coastal water-scarce cities, the realistic version of this combination is: reclaimed water plants + desalination plants + groundwater extraction reduction played together — reclaimed water covering industrial cooling and municipal non-potable uses, desalination covering incremental domestic drinking supply, and extraction reduction restoring aquifers. The investment rhythm and proportion of the three determine the long-term cost curve of the entire urban water system.
Conclusion
1.09 亿 USD loan, 170 万 gallons/day capacity, 110 亿 USD remaining balance — beyond these figures, what is more worth remembering is the structure of this project: using federal low-interest funds to smooth water tariff impact, using a combination of seawater desalination and reclaimed water to replace groundwater extraction, and using by-product disposal facilities to front-load environmental costs. Against the backdrop of increasingly scarce water resources and frequent extreme weather, this "multi-source + structured financing" combination is becoming the standard solution for water-scarce cities worldwide.
About TIANYI TECH: TIANYI TECH (TIANYI LIMITED) focuses on the fields of wastewater treatment, reclaimed water reuse, and water environment governance, providing municipal and industrial clients with full-chain services including process design, equipment integration, engineering general contracting, and smart operations. The company has engineering capabilities in advanced reclaimed water treatment, dual water supply, and brine disposal, and can provide multi-source allocation and integrated water resource planning consulting for water-scarce cities. For more information, please visit the company website at www.tianyitech.hk.
Source: U.S. Environmental Protection Agency, "EPA Announces $109 Million WIFIA Loan to Increase Water Supply Reliability in Honolulu, Hawaii" (2026 年 10 月 16 日, EPA Newsroom). This article is compiled based on the publicly available content of this announcement.
