Section 2: Beneficial Electrification End-Use Applications

Building Electrification

Residential Water Heating

Advanced Hot Water

Heating water demands a lot of energy. Why not get smarter about how we use it?

Just when we thought we knew all there was to know about heating water, along comes another breakthrough technology: heat pump water heaters.

Similar to traditional heat pumps, heat pump water heaters (HPWH) use electricity to move heat from one place to another instead of generating heat directly. These water heaters can be two to four times more energy efficient than a generic electric resistance water heater through capturing the environment’s ambient heat and raising the water temperature in the tank. While HPWHs are more expensive up front, they will generally cost the user less when compared to fossil fuel or resistance water heaters over 10 years.

“The opportunities for co-ops to improve load profiles, save member-consumers’ money and build load through electrification of heating and water heating—the two largest sources of household energy demand—have improved significantly over the last decade.”

- NRECA Report, 2020

Benefits to the Customer and the Utility

Advancements in residential water heaters are allowing customers and utilities to save money through high-efficiency technology and the integration of demand response networks.

When equipped with smart controls, both heat pump water heaters and electric resistance can be leveraged by a utility as an additional grid resource. This array of residential water heaters can become a discrete network of grid-stabilizing backup power for a utility to dispatch during times of high demand.

The process of a heat pump water heater

Heat pump water heater process diagram. Image Credit: Quantum Energy

Heat Pump Water Heaters Can Save Customers Money

Less Expensive to Operate

  • Efficiency pays off: operating heat pump water heaters regularly costs less than half the cost of operating a propane or fuel oil water heater

Reducing the Rural Energy Burden

  • Rural residents who use propane or heating oil often pay more to heat their homes than urban or suburban residents

Stable Fuel Costs

  • Customers can count on stable electricity prices as compared to the volatile fossil fuel market

Water heater demand response explanation

Demand response explainer. Image Credit: National Rural Electric Cooperative Association

A Hidden Battery

Smart Controls Reduce Waste Energy

Utilities have been using water heaters for demand response programs for decades. However, controls have evolved from simple switches to more intelligent systems that offer more sophisticated controls to maximize cost savings. Demand response relies on tools and behavioral change to meet its goals, and coordinating the storage of heat energy through a network of residential water heaters can be one such tool. This improvement in sophisticated energy storage potential can benefit the customer and utility by allowing both parties to avoid times of peak demand.

As customers are educated as to how their subtle behavioral shift will adjust their time-of-use rate, utilities may expand their efforts into encouraging more smart home technologies.

Water heaters can complement other smart home appliances to shift even larger amounts of peak demand to non-peak times, which may also allow the utility to leverage excess renewable energy when wholesale power prices are low.

This smart and efficient use of energy may reduce the need for energy, emissions, and capital-intensive peaker plants that exist only to meet peaking demand.

Water heater demand response efforts across 250 rural co-ops have reduced demand by 500 megawatts, saving more than $200 million.

Shift Time of Use

Parts of the United States have expanded demand response programs due to peak constraints and high demand charges. While other parts of the country, such as the Pacific Northwest, were less concerned about peaking in the past, extreme weather events and a changing grid are demonstrating the importance for many areas to develop such programs. Water heaters are the simplest form of energy storage allowing a utility to reshape its load profile. While heat pump water heaters draw a lower amperage, they have a higher duty cycle and can also be used effectively to build demand response programs.

Load Growth to Benefit the Utility

Electric water heating offers utilities opportunities for load growth similar to other forms of electrification. Managing this load is as important as the growth itself, and preparing for customer demand for electrification is key to getting ahead of any future grid constraints. This preparation will allow for the load growth to be truly beneficial.

Controllable load is an exceptional type of load growth to harness as it can help to mitigate peak capacity issues. While many utilities have sought electric resistance water heaters in the past for these reasons, the ecosystem is evolving where heat pump water heaters may now offer the most benefits to customers while still building flexible load for the utility.

  • One household converting to a heat pump water heater can increase its energy use by 30%

  • Scaling this to 500 homes in a service territory is an increase of
    79 MWh/month

Market Outlook

According to NRECA‘s 2017 Tech Surveillance report, “eighty-two percent of all water heater sales are emergency replacements.” At a failure rate of about 8 to 10 percent per year for standard water heaters, most co-ops will have hundreds of members dealing with emergency replacements of their water heaters each year. In an emergency replacement scenario, consumers want to restore their hot water quickly and are often overwhelmed by the unexpected expense. Utilities can be ready to support their customers with a product that will meet their need and save money throughout its operation.

 

 Additional Resources