• Virtual Power Plants
  • Peak Demand
  • Grid Resilience
  • Demand Side Management
  • Water Infrastructure

Grid-Interactive Water Heaters Are Important VPP Resources

Dan Power
Nov 12, 2021

Guidehouse Insights

Water heaters are one of the most ubiquitous pieces of equipment in the building sector. In addition to being essential for everyday life, water heaters offer enormous thermal storage and load flexibility potential. In the US, water heating is the second-largest single end use energy user after space heating, accounting for roughly 19% of overall energy use in homes. 

When made electric and equipped with two-way grid communication abilities, storage water heaters become known as grid-interactive water heaters (GIWHs). Two-way grid communication allows grid operators to heat water in customers’ homes at any point throughout the day. Water heating is a flexible end use, and if hot water is available when the consumer needs it, it can be heated at another point during the day. The thermal mass of the water in the tank acts as a virtual storage device for the energy used to heat it, ensuring that zero-carbon electricity isn’t wasted.

In a grid increasingly powered by renewable sources that are often at high output levels when demand is low, GIWHs enable load shifting to make demand for hot water follow supply. Excess solar energy in the early afternoon that would have otherwise been curtailed could be used to heat water in anticipation of the evening demand ramp when people return home from work and school. Overnight, electricity demand is low, so excess wind capacity could be used to preheat water in anticipation of the morning demand ramp when people are waking up and getting ready for the day. Using this load flexibility results in a more predictable and stable net load curve. Guidehouse Insights explores the importance of valuing load flexibility and its role in maintaining grid reliability in its report, Load Flexibility Valuation s Critical to Grid Reliability.

Virtual Power Plants Are Beginning to Include GIWHs

When hundreds or thousands of GIWHs are aggregated, the result mirrors that of a fleet of batteries. They absorb excess energy from the grid to power end uses later in the day, resulting in less demand that needs to be filled at the time of end use. In recent years, more virtual power plants (VPPs) have started to include GIWHs in their portfolios on top of more conventional, flexible sources, such as rooftop solar and behind-the-meter batteries. In October 2019, Shifted Energy announced plans to install 2,400 GIWHs across Oahu and Maui to form a 2.5 MW VPP. The units would be aggregated and respond to grid signals to provide grid services, such as fast frequency response and grid capacity increase and decrease. 

In February 2021, Rheem Australia, the Australian Renewable Energy Agency, and the South Australian government announced plans for a water heater VPP. The pilot project will link 2,400 residential electric water heaters. Rooftop solar energy is abundant in South Australia, and excess energy is often curtailed or exported to other parts of the country. With export limits being reached, this project aims to have the heaters form a large virtual battery that can absorb the excess solar energy during the middle of the day, reducing the amount that needs to be curtailed. GIWHs are valuable resources that, when aggregated and scaled as a VPP, can reduce renewable energy curtailment, aid in grid stabilization, and reduce emissions—all without sacrificing end users’ comfort.