A new report by economists at The Brattle Group reveals that advanced strategies of using electric water heating to provide ancillary services, store thermal energy on a daily basis, or adopt heat pumps can provide significant value to the electric power grid.

Prepared for the National Rural Electric Cooperative Association (NRECA), the Natural Resources Defense Council (NRDC), and the Peak Load Management Association (PLMA), the Brattle study considers two types of electric water heating technologies: electric resistance water heaters (ERWHs), which use an electric heating element to directly heat water and maintain a desired temperature by turning on and off in short “bursts” of energy, and heat pump water heaters (HPWHs), which draw heat from the surrounding air to heat the water. 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.

The authors also find that both forms of water heating could provide substantial environmental benefits. Heat pump water heaters provide the most consistent environmental benefit on a per-water heater basis through overall reductions in energy consumption. They have the ability to reduce carbon dioxide (CO2) emissions associated with customers’ water heating needs by approximately 50% relative to use of a conventional electric resistance water heater. Similarly, their analysis also finds that the water heating CO2 footprint can be reduced by 30% for customers who use their electric resistance water heaters to shift load from higher emissions hours to lower emissions hours on a daily basis.

“Electric water heaters are effectively pre-installed batteries sitting idle in more than 50 million homes across the U.S.,” noted Ryan Hledik, a Brattle principal and lead author of the study. “While the economic benefits of advanced water heating load control and efficiency strategies will certainly vary across jurisdictions, we have found that they present a significant untapped and cost-effective opportunity to improve the operations of the power grid.”

The report, “The Hidden Battery: Opportunities in Electric Water Heating,” is authored by Mr. Hledik, Principal Judy Chang, and Associate Roger Lueken. It is available for download below.

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