The
nation’s 50 million residential electric water heaters collectively
represent a significant – and vastly underutilized – energy storage
resource capable of leveraging substantial environmental and cost
benefits according to new research commissioned
by the National Rural Electric Cooperative Association (NRECA), the
Natural Resources Defense Council (NRDC), the Peak Load Management
Alliance (PLMA) and Great River Energy (GRE).
This finding from the global economic consulting firm The Brattle Group was announced today (Feb. 10, 2016) at the launch of an initiative designed to promote growth in a novel, community-based approach to energy storage, dubbed “community storage.” By aggregating distributed energy technologies and home appliances, electric cooperatives are developing community storage to increase energy efficiency, better integrate renewable energy resources onto the grid, and reduce customers’ monthly electric bill.
One such community storage program managed by Minnesota-based generation and transmission cooperative Great River Energy has been able to store a gigawatt of energy each night by controlling the electric resistance water heaters of 65,000 end-use members.
“At Great River Energy, we believe there’s a battery hidden in basements all across our service territory,” said Gary Connett, director of member services at Great River Energy. “When the wind is blowing or the sun is shining, large capacity water heaters can be enabled to make immediate use of that energy to heat water to high temperatures. The water heaters can be shut down when renewables are scarce and wholesale costs are high.”
Even in regions heavily reliant on coal and natural gas to generate electricity, the Brattle research shows that consumers have options for saving money on their electric bills and reducing carbon dioxide (CO2) emissions associated with their water heating. Consumers can reduce CO2 emissions by up to 30 percent using their water heater as a thermal battery. Consumers can reduce their CO2 emissions by more than 50 percent using heat pump water heaters.
These same consumers will be enabling integration of clean, renewable resources. Further, the emission reductions of community storage will compound as more consumers participate and the electricity sector transitions to cleaner fuels and generation technologies.
“Co-ops have been controlling large water heaters for decades in order to reduce demand at peak times, which also reduces members’ electric bills. A community storage program using advanced water heaters allows us to do even more: we can store energy, we can optimize the power grid by shaping demand and we can integrate more renewable resources,” said Keith Dennis, NRECA’s senior principal for end-use solutions and standards.
“Smart, grid-connected electric water heaters represent a promising possibility for a more efficient, more economic, and ultimately lower-emissions electricity system,” said Robin Roy, director of building energy efficiency and clean energy strategy at the NRDC. “Given that water heating represents more than 15 percent of household energy use, this is a great opportunity to cut energy waste and also the emissions from electricity generation.”...
[Using data from the PJM and Midcontinent ISO markets, and relying on detailed simulations of water heater operations, the authors evaluate several different approaches for controlling the load of the water heaters. They find that the net benefits of these approaches could reach around $200 per participant per year under certain market conditions. This would effectively pay for the entire cost of the water heater and associated control equipment (including installation) in five years.
Electric water heaters are essentially pre-installed thermal batteries that are sitting idle in more than 50 million homes across the U.S....Electric water heaters account for 9% of all electricity consumed by households nationally. This represents the third single largest source of residential electricity consumption, behind only space cooling (13%) and lighting (11%). More than 40 percent of U.S. households have electric water heating.
Figure ES-1 shows the estimated incremental annualized net benefits of each of the water heating strategies analyzed in this study, based on market prices observed in PJM in 2014.5 These net benefits are incremental relative to maintaining an uncontrolled 50-gal ERWH (the baseline assumption).
“At Great River Energy, we believe there’s a battery hidden in basements all across our service territory,” said Gary Connett, director of member services at Great River Energy. “When the wind is blowing or the sun is shining, large capacity water heaters can be enabled to make immediate use of that energy to heat water to high temperatures. The water heaters can be shut down when renewables are scarce and wholesale costs are high.”
Even in regions heavily reliant on coal and natural gas to generate electricity, the Brattle research shows that consumers have options for saving money on their electric bills and reducing carbon dioxide (CO2) emissions associated with their water heating. Consumers can reduce CO2 emissions by up to 30 percent using their water heater as a thermal battery. Consumers can reduce their CO2 emissions by more than 50 percent using heat pump water heaters.
These same consumers will be enabling integration of clean, renewable resources. Further, the emission reductions of community storage will compound as more consumers participate and the electricity sector transitions to cleaner fuels and generation technologies.
“Co-ops have been controlling large water heaters for decades in order to reduce demand at peak times, which also reduces members’ electric bills. A community storage program using advanced water heaters allows us to do even more: we can store energy, we can optimize the power grid by shaping demand and we can integrate more renewable resources,” said Keith Dennis, NRECA’s senior principal for end-use solutions and standards.
“Smart, grid-connected electric water heaters represent a promising possibility for a more efficient, more economic, and ultimately lower-emissions electricity system,” said Robin Roy, director of building energy efficiency and clean energy strategy at the NRDC. “Given that water heating represents more than 15 percent of household energy use, this is a great opportunity to cut energy waste and also the emissions from electricity generation.”...
[Using data from the PJM and Midcontinent ISO markets, and relying on detailed simulations of water heater operations, the authors evaluate several different approaches for controlling the load of the water heaters. They find that the net benefits of these approaches could reach around $200 per participant per year under certain market conditions. This would effectively pay for the entire cost of the water heater and associated control equipment (including installation) in five years.
Electric water heaters are essentially pre-installed thermal batteries that are sitting idle in more than 50 million homes across the U.S....Electric water heaters account for 9% of all electricity consumed by households nationally. This represents the third single largest source of residential electricity consumption, behind only space cooling (13%) and lighting (11%). More than 40 percent of U.S. households have electric water heating.
Figure ES-1 shows the estimated incremental annualized net benefits of each of the water heating strategies analyzed in this study, based on market prices observed in PJM in 2014.5 These net benefits are incremental relative to maintaining an uncontrolled 50-gal ERWH (the baseline assumption).
The environmental impacts of ERWHs 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 system peak load reductions provided by the Peak Shave strategy make it particularly economic in markets where there is a need for new generating capacity. Net benefits per water heater in the PJM 2014 and MISO 2028 scenarios are $13 and $29 per customer per year, respectively. At very low capacity prices such as those in the MISO 2014 scenario, however, the avoided costs do not overcome the incremental cost of the equipment needed to control the water heater, with a net benefit of -$15 per customer per year....
For a 50-gallon tank, the Thermal Storage strategy may increase net benefits relative to the Peak Shave strategy by as much as $2 per customer per year or decrease net benefits by as much as $5 per customer per year....
The Fast Response strategy requires more expensive control equipment than the previously discussed strategies, as there are additional requirements associated with being able to provide frequency regulation (such as having control equipment that is capable of receiving and responding to the system operator’s high-frequency control signal). Based on a review of material on the economics of grid interactive water heaters, we have assumed an equipment cost premium of $400 per water heater (an annualized cost of $47) to account for these requirements. This advanced control technology is only beginning to become commercially available and costs could decrease significantly over time. Given an observed downward trend in these technology costs and an expectation that this trend will persist as the market matures, we use an illustrative assumption that the cost premium will drop to $200 per water heater (annualized cost of $23) in the MISO 2028 scenario.
While the costs of the Fast Response strategy increase, so do the benefits. In the PJM 2014 scenario, for example, gross benefits increase from $118 per customer per year with the Thermal Storage strategy to $269 with the Fast Response strategy. A detailed breakdown of the costs and benefits under these two strategies is provided in Figure 7. As market adoption of the technology increases and experience grows, it is possible that the more sophisticated control technology will provide additional benefits, such as a refined algorithm that maximizes load reductions during high priced periods and/or minimizes the potential for undersupply of hot water....
The Fast Response strategy can produce the largest net benefits when ancillary services prices are high. Across all three of the market scenarios analyzed in this study, frequency regulation value is greater than the incremental equipment cost premium necessary for fast load response. This net increase in benefits means that the economics of water heating load control improve relative to the Thermal Storage case, increasing by between $38 and $142 per customer per year, depending on the market scenario....]
“The National Community Storage Initiative will focus attention on the immediate opportunity for national, regional and local market development efforts to demonstrate the potential of ‘behind-the-meter’ electric storage technologies,” said Rich Philip, manager of products and services at Duke Energy, and PLMAchairman.
The Brattle Group conducted the research on behalf of the four sponsoring organizations.The Fast Response strategy requires more expensive control equipment than the previously discussed strategies, as there are additional requirements associated with being able to provide frequency regulation (such as having control equipment that is capable of receiving and responding to the system operator’s high-frequency control signal). Based on a review of material on the economics of grid interactive water heaters, we have assumed an equipment cost premium of $400 per water heater (an annualized cost of $47) to account for these requirements. This advanced control technology is only beginning to become commercially available and costs could decrease significantly over time. Given an observed downward trend in these technology costs and an expectation that this trend will persist as the market matures, we use an illustrative assumption that the cost premium will drop to $200 per water heater (annualized cost of $23) in the MISO 2028 scenario.
While the costs of the Fast Response strategy increase, so do the benefits. In the PJM 2014 scenario, for example, gross benefits increase from $118 per customer per year with the Thermal Storage strategy to $269 with the Fast Response strategy. A detailed breakdown of the costs and benefits under these two strategies is provided in Figure 7. As market adoption of the technology increases and experience grows, it is possible that the more sophisticated control technology will provide additional benefits, such as a refined algorithm that maximizes load reductions during high priced periods and/or minimizes the potential for undersupply of hot water....
The Fast Response strategy can produce the largest net benefits when ancillary services prices are high. Across all three of the market scenarios analyzed in this study, frequency regulation value is greater than the incremental equipment cost premium necessary for fast load response. This net increase in benefits means that the economics of water heating load control improve relative to the Thermal Storage case, increasing by between $38 and $142 per customer per year, depending on the market scenario....]
“The National Community Storage Initiative will focus attention on the immediate opportunity for national, regional and local market development efforts to demonstrate the potential of ‘behind-the-meter’ electric storage technologies,” said Rich Philip, manager of products and services at Duke Energy, and PLMAchairman.
The research examines the economic and grid benefits of controlling three different types of water heaters (80-gallon electric resistance, 50-gallon electric resistance, and heat pump water heaters) for peak shaving, thermal storage, and real-time fast response to supply fluctuations. Researchers modeled these program designs using 2014 data from the PJM and MISO markets.
The Brattle researchers also modeled these programs using projected prices and energy resources in MISO in 2028 to determine the economic and environmental potential of electric water heaters to provide energy services to the grid in the future. The report NRECA-NRDC-PLMA report, “The Hidden Battery: Opportunities in Electric Water Heating,” is authored by Brattle Principals Ryan Hledik and Judy Chang, and Associate Roger Lueken.
The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 2 million members and online activists. Since 1970, our lawyers, scientists, and other environmental specialists have worked to protect the world’s natural resources, public health, and the environment. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Bozeman, MT, and Beijing. Follow us on Twitter @NRDC.
The Peak Load Management Alliance (PLMA) was founded in 1999 as the voice of demand response practitioners. It is a community of experts and practitioners dedicated to sharing knowledge and providing resources to advance the demand response marketplace. PLMA members share expertise to educate each other and explore innovative approaches to demand response programs, price and rate response, regional regulatory issues, and technologies as the energy markets evolve. PLMA does no lobbying, but serves as an information source to practitioners and regulatory agencies.
The Peak Load Management Alliance (PLMA) was founded in 1999 as the voice of demand response practitioners. It is a community of experts and practitioners dedicated to sharing knowledge and providing resources to advance the demand response marketplace. PLMA members share expertise to educate each other and explore innovative approaches to demand response programs, price and rate response, regional regulatory issues, and technologies as the energy markets evolve. PLMA does no lobbying, but serves as an information source to practitioners and regulatory agencies.
Great River Energy, Maple Grove, Minn., is generation and transmission cooperative providing wholesale electric service to 28 Minnesota distribution cooperatives. Those member cooperatives distribute electricity to approximately 655,000 member-consumers. Great River Energy and its members offer a robust demand response program, and are able to control up to 350 megawatts of load. Great River Energy is the second largest electric power supplier in Minnesota and one of the largest generation and transmission cooperatives in the nation.
Peak Load Management Alliance http://www.peakload.org Press Release dated February 12, 2016
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