During the 1928 Presidential campaign, an ad for Herbert Hoover in the New York Times promised “a chicken in every pot, and a car in every garage.”

Gary Connett, director of member services at Great River Energy, has his own version: “A battery in every basement, and gas in every garage.”

He's talking about water heaters and electric vehicle charging stations, two appliances which can be harnessed by utilities to shift demand and store energy.  And while electric vehicles remain a nascent technology, water heaters are ubiquitous. There are roughly 50 million electric water heaters in the country, and according to new research from Brattle Group, they make up an enormous potential energy resource that could save consumers up to $200 annually while allowing utilities better control over their load curves.

The Brattle report was completed on behalf of three groups – the National Rural Electric Cooperative Association, Peak Load Management Alliance and Natural Resources Defense Council – and serves to kickstart a discussion on community storage initiatives the groups hope might operate similarly to popular community solar programs now under development. The report is titled "The Hidden Battery: Opportunities in Electric Water Heating."

“There's been talk of smart appliances for years, but somehow the water heater in the basement has been forgotten,” Connett said. “But I would argue it may be the most important, most strategic appliance, because it's the only appliance today that has the ability to store energy.”

Great River is a transmission and generation cooperative providing wholesale electric service to 28 Minnesota distribution cooperatives, and Connett said the utility has more than 1 GWh of energy storage in 110,000 electric water heaters currently under its control – each one storing 12 kWh to 14 kWh of energy.

The utility also controls about 167,000 air conditioners. “I don't know another utility that can say that,” Connett said. “Nearly a third of all air conditioners that great river serves are under our control.”

“Being largely residential, we want to take charge of our load curve,” he said. “And in order to do that, we have to do it one house at a time.”

Community storage

It seems new community solar projects are cropping up each week, and some see the potential for similarly-modeled storage programs – essentially the aggregation of fleets of residential appliances with energy storage capabilities. The NRECA-NRDC-PLMA work group is calling itself the National Community Storage Initiative, and hopes to focus attention on opportunities to develop national, regional and local markets for electric storage technologies.

“The community storage initiative is an effort to harness the untapped storage capacity of common electrical appliances and products that are dispersed in communities throughout the country,” said Keith Dennis, NRECA’s senior principal for end-use solutions and standards. Water heaters, he said, are common devices that can assist with peak shaving, thermal storage and provide ancillary services.

“We expect to have a diverse group of interests, and we are expecting innovation,” he said. Other technologies which could work in aggregated, residential storage fleets include ceramic block heaters and community swimming pools.

Great River actually has about 15,500 ceramic block heaters on its system, and they could be used in the same manner.  But “the beauty of water heating is it's a 12-month load. and it's a load everyone is going to have,” Connett said, explaining the utility's focus. “While we think electric thermal storage space heating is equally important, there are opportunities that water heating provides that go well beyond the heating season.”

Ice storage is also “very promising,” said Robin Roy, director of building energy efficiency and clean energy strategy at the NRDC. “The more we look, the more we'll find there are opportunities.” He points out that water heating makes up about 14% of household energy costs and 18% of energy use, so “even modest improvements can deliver big benefits.”

Large water heaters saved by 2015 energy legislation

But last year, water heating's potential as a demand management resource was uncertain. Congress was set to ban electric resistance water heaters with a storage capacity of over 55 gallons, which sent electric cooperatives scrambling.

The Steele-Waseca Cooperative Electric, in Minnesota, was one utility facing that scenario. The provider came up with an unusual promotion designed to move a backstock of the heaters out of storage and into residences before a ban went into effect: Give them away, when customers bought into a community solar program at a reduced price. The benefit to the utility was so high that giving the heaters away free made sense.

Co-op officials said the program was break-even. Combining the discount on the solar panel with the $1,000 cost for the water heater amounts to customer savings of more than $2,000. But for Steele-Waseca, it meant greater control over about 20% of its total potential peak load.

Ultimately, the bipartisan Energy Efficiency Improvement Act of 2015 carved out an exemption for large water heaters being used in demand response programs. That was when their potential as dynamic storage assets came to the attention of NRDC. "It was more novel for us," said Roy. But the technology is "highly promising."

"This is an area ripe for development with large economic and environmental benefits," he said.

The benefits of smart water heaters

Water heaters have been recognized for years as demand response resources, cycling off during peak times. But advancements in two-way control, smart meters and more efficient heaters means the potential benefits have grown to include frequency modulation and voltage support. Those ancillary services are important for demand management providers, because they allow smaller banks of resources to be aggregated into usable quantities of energy.

Connett said Great River is experimenting with a fleet of 10 water heaters in northern Minnesota, that can provide ancillary services.

The result is that, depending on market conditions, Brattle's research shows consumer benefits from storage-enabled water heating could be as much as $200 annually. 

“This would effectively pay for the entire cost of the water heater and associated control equipment (including installation) in 5 years,” Brattle found. “Considering only incremental costs of the advanced control capability, the payback period is around 3 years.”

The report considered two types of water heaters: electric resistance water heaters (ERWHs), which use an element to directly heat water and maintain a desired temperature by turning on and off in short “bursts” of energy; and heat pump water heaters (HPWHs) which draw heat from the surrounding air to heat the water.

Both HPWHs and controlled ERWHs "can have very strong positive economics, depending on market conditions," Brattle found. Controlled ERWHs "provide the largest economic benefit on a per-water heater basis."

The environmental impacts are not as clear, however. For ERWH technology, Brattle said it will depend heavily on the water heating control strategy being considered and the composition of the generation supply mix of the power system.

"Generally, HPWHs provide the most consistent environmental benefit on a per-water heater basis through overall reductions in energy consumption, reducing CO2 emissions by approximately 50% relative to an uncontrolled ERWH in our analysis," the report concluded.