The Big Shift: How smart hot water can lighten the load for consumers and grid
Action needed to align hot water heating with abundant renewables periods
Key Takeaways:
Improving efficiency and flexibility of water heating can significantly reduce this major cost for households and for the entire electricity system.
Hot water systems in Australia should be dynamically managed, to heat when there is abundant renewable electricity.
Government subsidies and standards should be updated to ensure all hot water systems sold in Australia are efficient and smart, as a futureproofing and cost-saving measure.
21 August (Australia): If more consumers had the flexibility to use Australia’s abundant daytime solar energy for their hot water, it would reduce power bills and take pressure off the grid, according to the Institute of Energy Economic and Financial Analysis (IEEFA).
Household rooftop solar systems now produce more electricity than any single coal-fired power station in Australia. This has driven daytime wholesale power prices into negative territory, while demand remains highest during the evening peak period, from 4pm-8pm.
Hot water systems, which account for a quarter of household power load, offer the biggest and cheapest solution to this mismatch by shifting water heating demand to the middle of the day, according to a new briefing note from IEEFA.
“Introducing flexible demand can reduce household energy bills and deliver benefits to the power system overall,” says Dr Gabrielle Kuiper, IEEFA guest contributor and author of the briefing note.
The flexible demand concept is not new. Since the 1950s, electricity distribution networks have employed it via “ripple control”, by using “excess” coal-fired power for household water heating during the overnight off-peak period.
Shifting household hot water demand to align with periods of abundant renewable energy can be achieved in two ways:
- Passive management – through timers on devices or ripple control times set by distribution networks for systems on controlled load circuits and tariffs; or
- Dynamic management – by adjustable ripple control or WiFi controls, set by the owner or a third party, which can be adjusted in response to changing conditions.
Dynamic management offers the greatest flexibility, using apps, touch screens or web portals, all features readily available in smart hot water systems.
“It is possible to treat a home hot water system like a thermal battery, storing heat in hot water until it is needed,” Dr Kuiper says.
As more Australian households electrify, it is the ideal time to introduce standards and incentives to encourage and support the use of smart, more efficient hot water systems.
"The Commonwealth Government in conjunction with state and territory governments should investigate which ‘smart’ requirements for hot water systems should be put in place nationally,” Dr Kuiper says.
IEEFA analysis has shown that if gas appliances were replaced with efficient electric alternatives at their end of life, the average household in Victoria, where gas heating is widespread, could save $1,200 a year on its energy bills. Flexible hot water offers further savings.
“We know there are cost savings, especially for consumers who can heat water with their own solar or take advantage of ‘solar sponge’ retail tariffs in the middle of the day or participate in retail demand response programs,” Dr Kuiper says.
“Flexible hot water not only reduces costs for its owners, but for the system as a whole if it is dynamically managed to soak up renewable energy when it is abundant and when network capacity is available. In these ways flexible hot water can lower bills for all electricity system users.”
Hot water system subsidies on offer across Australia lack cohesion or consistency, according to Dr Kuiper. South Australia still appears to subsidise the installation of “efficient” gas systems, while Victoria is the only state to require any flexible demand control to gain a heat pump hot water subsidy.
“The lack of hot water system management requirements in state subsidies is a missed opportunity to create cheap, flexible demand that grows with every subsidised hot water system installed,” Dr Kuiper says.
“Above and beyond these changes, a national strategy for domestic hot water is needed, including national measures around workforce, trade training and regulations.
“It is important for flexibility and energy performance requirements on hot water be in place as soon as possible given how fast households are electrifying. Making these measures a priority will future-proof Australian homes by synchronising their electricity needs with a growing variable renewable energy supply.”
Read the report: Australia needs more efficient, smarter home hot water systems
Media contact: Amy Leiper [email protected] +61 (0) 414 643 446
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (ieefa.org)
