Could Water Heaters Double as Batteries?
February 26, 2016
Not as svelte as a Tesla Power Wall, but – Smart is the ultimate sexy.
New research suggests that in the future, one of the most lowly, boring, and ubiquitous of home appliances — the electric water heater — could come to perform a surprising array of new functions that help out the power grid, and potentially even save money on home electricity bills to boot.
The idea is that these water heaters in the future will increasingly become “grid interactive,” communicating with local utilities or other coordinating entities, and thereby providing services to the larger grid by modulating their energy use, or heating water at different times of the day. And these services may be valuable enough that their owners could even be compensated for them by their utility companies or other third-party entities.
“Electric water heaters are essentially pre-installed thermal batteries that are sitting idle in more than 50 million homes across the U.S.,” says a new report on the subject by the electricity consulting firm the Brattle Group, which was composed for the National Rural Electric Cooperative Association, the Natural Resources Defense Council, and the Peak Load Management Alliance.
The report finds that net savings to the electricity system as a whole could be $ 200 per year per heater – some of which may be passed on to its owner – from enabling these tanks to interact with the grid and engage in a number of unusual but hardly unprecedented feats. One example would be “thermal storage,” which involves heating water at night when electricity costs less, and thus decreasing demand on the grid during peak hours of the day.
Of course, precisely what a water heater can do in interaction with the grid depends on factors like its size or water capacity, the state or electricity market you live in, the technologies with which the heater is equipped, and much more.
“Customers that have electric water heaters, those existing water heaters that are already installed can be used to supply this service,” says the Brattle Group’s Ryan Hledik, the report’s lead author. “You would need some additional technology to connect it to grid, but you wouldn’t need to install a new water heater.”
Of all the new tech emerging on the energy landscape, water heaters seem an unlikely contender. Alongside battery players like Tesla, with its Model X and Powerwall, water heaters look like even more of a stretch. However, the growing industry consensus is that grid-interactive water heaters have serious potential. They just might be the unexpected battery in your basement.
Why the buzz about water heaters?
Water heaters and batteries have one fundamental feature in common: they both store energy, batteries as charge and water heaters as heat. This ability to store energy gives water heaters flexibility. For example, they can be heated at night when power is cheap without jeopardizing your ability to take a hot shower in the morning.
Grid-interactive water heaters (GIWH) are electric water heaters that the grid operator or the local utility can control in real time (or the customer, automated software, or a third party could control them in response to granular retail price signals from the utility). This controllability makes a GIWH valuable for more than just hot showers. For example, in addition to heating water when power is cheap, it can also shut down during yearly system peaks, help integrate renewables, and provide services to the electric grid like frequency regulation. Optimizing water heaters like this can significantly reduce carbon emissions and, as explained below, create billions of dollars in value.
Better yet, this functionality is not dependent on future technology: any electric water heater with a tank—be it old-school electric resistance or newfangled heat pump—can become grid-interactive. Making modifications to an existing water heater to install a grid-connected communications device takes a couple of hours and could cost a few hundred dollars. However, building in grid-interactive capabilities at the factory only costs a few dollars and provides much more value to the grid and to the customer.
A high-value source of demand flexibility
In our 2015 report, The Economics of Demand Flexibility, RMI analyzed the potential of flexible loads to provide significant economic value to the grid, finding at least $13 billion per year from common residential loads like water heaters and air conditioners. We found that water heaters, especially, have the potential to be an easily-tapped and high-value source of this flexibility.
A new study by the Brattle Group provides an in-depth exploration of the economic benefits of GIWHs. The fact that the study was jointly commissioned by utilities, environmental advocates, and industry groups highlights the diversity of groups interested in the potential of GIWHs. Brattle analyzed the potential of multiple scenarios, calculating that up to $200 in net system benefits may be realized annually for every GIWH participant. Ultimately, the authors concluded that GIWHs are a resource with significant opportunity for reductions in both costs and emissions, and one whose operational viability is already being demonstrated in pilot projects around the country—an exciting endorsement for the mild-mannered water heater.
$3.6 billion/year in value from a grid-interactive fleet of water heaters. Source: RMI.
But are they valuable enough to reach their full potential? The answer seems to be yes: RMI calculates that, if America’s nearly 50 million residential electric water heaters went grid-interactive, the system benefits would reach $3.6 billion. This number comes from the following sources of value:
- Energy arbitrage: simply heating water when power is cheaper (at night rather than in late afternoon, for instance) provides major value. ($1.8B)
- Avoided generation: avoiding utility investments is a huge source of value. By ensuring that water heaters don’t draw power during times of peak electricity demand, utilities can avoid building extra generation resources. ($1.4B)
- Avoided transmission & distribution: for the same reason as above, not using power on peak avoids investment in expensive transmission & distribution system resources. ($400M)
- Renewable integration: water heaters charging up at night could use wind energy that would otherwise be curtailed, or daytime solar that would otherwise be exported for less-than-retail compensation in certain markets. ($36M)
- Smart energy savings: installing a grid-interactive device could also allow homeowners to program their water heater for “vacation mode,” which prevents energy waste through standby losses. ($29M)