While Tesla’s plan to build a lithium-ion battery storage factory is grabbing the spotlight, electric water heaters may already be on the leading edge of energy storage.

Electric utilities have long used load control of water heaters, space heaters and air conditioners to shave peak demand. Once grid-interactive, two-way communication devices are attached to water heaters, utilities can quickly ramp up and down the appliances, giving them the ability to very quickly control load and provide balancing services to grid operators.

Hawaii eyes smart water heaters
The Hawaiian Electric Company (HECO) hopes to be the first to demonstrate the benefits of grid-interactive water heaters on a system-wide basis, according to Earle Ifuku, director of the utility's demand response programs.

Hawaii is rapidly increasing its appetite for renewable resources making the need to balance the grid urgent. In Oahu, about 11% of Hawaiian Electric customers have solar photovoltaics on their homes, Ifuku said. Renewable resources comprise between 30% to 40% of Maui Electric Company customers, which serves Maui, Hawaii Electric Light, the big island of Hawaii.

“Our systems are smaller, so we can get more granularity quicker, benefits to customers quicker, and benefits to our system operators quicker,” Ifuku said.

This summer, HECO will launch a year-long pilot with 50 grid-interactive water heating units for residential and small business customers, Ifuku said. The project is part of the utility’s demand side management programs. Maui Electric Company will also participate in the summer pilot with funding from the Electric Power Research Institute.
Smart water heaters, which cost about $1,500 including installation, will be free for pilot participants. In exchange, participants will provide internet access, through which the devices are controlled. As part of the project, the utility will look at pricing and incentives that would make sense to encourage customer engagement, Ifuku said.

The economics look promising

Paul Steffes, CEO of the Steffes Corporation, told Utility Dive that findings posted by Sandia National Laboratory show that grid-interactive water heating technology is far less costly compared with other battery options. The company developed grid-interactive thermal storage controls for about 25 pilots that underway in the U.S, he said.

According to the analysis gleaned from the software, the total cost of ownership for the smart water heater produced by Steffes Corporation is roughly $375/kW compared with roughly $2000/kW for ICE technology and about $4000/kW for lithium-ion batteries.

The caveat is that smart water heaters can’t do everything that lithium ion batteries can do, according to a source close to Sandia National Labs. They are able to store energy in the sense that they heat water for later use, but they cannot put energy back on the grid, like lithium ion batteries.

Gary Connett, director of demand-side resources for the Minnesota-based Great River Energy Cooperative, said savings are a big draw. The coop is running 10 pilots through a grant from the U.S. Department of Energy. Using smart water heaters for ancillary services means that the coop has a competitively priced way of heating hot water, Connett said.

Turning up the heat

The fact that every home has a water heater may be a blessing and a curse for this emerging technology. Water heaters are everywhere, and smart water heaters have gotten relatively little attention so far.

Steffes told Utility Dive that he and other supporters are working to change that. They are meeting with regulators and utilities to get the word out about the emerging technology.

A key regulatory obstacle that needs be resolved is determining how this battery option would be calculated in utility rates, he said.

Connett believes the technology is on the cusp of getting greater acceptance.

“We’ve heard a lot of talk about smart appliances for years now, and largely we’ve been thinking about refrigerators and appliances," he said. Maybe the true smart appliance is the “electric water heater in your basement.”