Electric Water Heater Potential Demands a Response

When a typical household consumes energy during the day, it is often an afterthought, done with little consideration of impacts of that use on the electrical grid. One household doesn’t really add that much load onto the grid. But when a large number of residential customers ramp up air conditioning or space heating at the same time, utilities must resort to costly generation sources often derived from fossil fuels to fulfill this demand. Peaks like these make energy more expensive for everyone.

To address these high costs, the Oregon Public Utility Commission (PUC) staff has entertained the notion of time-of-use (TOU) rates—raising rates during peak hours to deter electricity use and free up electricity in the system. To an economist, creating a price signal might make sense as a way to motivate customers to use more energy during off-peak hours. But what goes overlooked is how the overwhelming burden of paying for TOU rates falls on the shoulders of vulnerable and low income customers already struggling to pay their bills. TOU rates are a one-size-fits-all solution that ignores individual economic realities and the energy use patterns of many Oregon households. To learn more about CUB’s position, take a look at our blog about TOU rates from earlier this week after a hearing at the PUC.

As we discussed TOU rates, a familiar topic for those familiar with our Smart Grid series came up: how can emerging technology be used to address demand response issues related to high peak usage? After careful and considered research, we determined that load control technologies, such as devices places on electric water heaters or air conditioners, might be a good fit for managing and adapting to peak energy load.

The collective benefits of adjusting and adapting energy load are manifold: avoiding grid congestion and transmission build-outs, lowering the costs of purchasing additional fossil-fuel based generation resources, alleviating local distribution system issues, and balancing out the intermittencies of wind generation. In the cool Pacific Northwest where peak demand typically occurs in winter months, load control technologies that focus on how and when to heat water in the home promise to deliver these benefits without diminishing customer comfort or convenience. The technology is also quite simple. The utility installs a lunchbox-sized device onto water heaters that can make slight modifications to the temperature of the water heater. It does so by responding to a wireless signal that turns the heater on or off during pre-set or customized times. All customers have to do after setting personalized comfort parameters is forget about it and benefit from monthly credits to their energy bill.

The Emerald People’s Utility District (EPUD) in Eugene recently conducted the PowerSync pilot program, installing load control devices onto water heaters and programmable thermostats. EPUD sends out a wireless signal to shut water heaters on and off during high demand periods. The programmable thermostats empowered customers to establish more efficient parameters for heating and cooling their homes, and water heater load control devices freed up between 4-5 kwh of electricity from each participating home during peak power events. With wider implementation scheduled to reach across EPUD’s service territory, the program will help the community slow increasing pressure on rates from peak demand.

Due to the large number of electric water heaters here in Oregon—estimates range as high as over 2 million electric water heaters across the Pacific Northwest—there exists a very high energy saving and storage potential in home hot water storage appliances. By combining load control devices with either remote switches or existing home wireless/broadband connections, the residential water heater can serve a central role in freeing up multiple megawatts of electricity on the grid and shaving dollars off of customers’ energy bills without imposing any significant behavioral changes. Further, in a state where the on-again off-again availability of wind power often strains grid capacity, more advanced water heater technologies allow a utility to quickly signal water heaters to turn on when the time is ideal to store surplus wind power.

The ability for water heaters to absorb excess wind power is an intriguing fit for Oregon’s burgeoning renewable energy portfolio. Earlier this year, federal energy marketer and grid manager Bonneville Power Administration struggled to integrate wind power to the point where it had to reduce its wind power generation because the grid was overstressed by the increased hydroelectric power output from the spring run-off. Through the storage capabilities of a new generation of water heaters and load control devices, this problem could be solved by storing surplus wind power in the form of superheated water that is cooled to a safe temperature through a mixing valve before use. Likewise, utilities can adjust water heater temperature downward by few degrees during hours of peak demand. Thus, when an especially windy day turns the turbines at a wind facility near The Dalles, utilities may soon be able to synchronize water heaters to absorb some of this electricity at coastal residences in Astoria.

The proliferation of water heater load control technology serves as the cornerstone for a smarter electricity grid by virtue of two-way information sharing between the household and utility. Privacy concerns must be addressed by the PUC to ensure that energy use information is kept safe. Safety concerns, however minimal given the small number and low intensity of signals transmitted, must also be answered. These concerns, while valid, should not stymie the boundless potential for these technologies to keep rates low and source cleaner electricity into the home. They will pave the way for future mechanisms that store wind power in electric vehicle batteries during off-peak hours and provide electricity to draw from during peak demand events.

The energy and cost savings of these technologies are difficult to ignore, and the cost of implementation is reasonable. CUB believes water heater load control devices are now ripe for implementation by the state’s largest utilities without sacrificing customer privacy or convenience.

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