Water Heaters Have Battery Potential
This article is part of our exclusive IEEE Journal Watch series in partnership with IEEE Xplore.
Water heaters are, according to new research, sizing up to be more than just water heaters in the modern, renewably-powered home. They could, in fact, be something closer to a battery.
The concept is simple but effective—when energy supply is high, it can be stored as heat in the water. Homeowners then reduce their subsequent water-heating demand. This reduced demand is the same (from the perspective of the electricity grid) as excess energy being sold back to it. In a study published earlier this month in IEEE Open Access Journal of Power and Energy, researchers found that water heaters offer an overall more cost efficient way to store energy compared to batteries.
Mahan Mansouri, who is currently an Expert Energy Market Analyst at Pacific Gas and Electric, conducted the study as part of his PhD dissertation at Ohio State University. He says that there are a handful of energy companies that already use electric water heaters as a form of energy storage, and he was interested in exploring the cost efficiency of this approach in more detail.
“An individual water heater represents a very small electricity demand on the scale of a bulk electricity system,” Mansouri said. “However, aggregating thousands or millions of water heaters could be very low-cost compared to deploying batteries.” He added that there are already more than 58 million households in U.S. with electric water heaters that could be used for this purpose.
Notably, a number of states, including California and New York, are already taking measures to ensure that new electric water heaters that are deployed within their jurisdictions are designed to support flexible energy storage needs, paving the way for this method to be more widely deployed in the future.
But how cost effective is this approach compared to using 10-MW lithium ion batteries for energy storage?
In their study, Mansouri and his supervisor Ramteen Sioshansi, a Professor in Department of Engineering and Public Policy at Carnegie Mellon University, used real-world data from California to conduct a technical and economic analysis.
Mansouri said he and Sioshansi chose California because the state relies heavily on rooftop solar panels, which generate an abundance of energy midday, when supply often outstrips demand. “Thus, having the ability to store that energy midday and use it later during the evening when solar output falls, would be of great value,” Mansouri said.
The results show that the batteries are more profitable because water heaters can only store energy for a couple hours. For this reason, batteries can provide more revenue to homeowners who are selling their energy back into the grid—yielding an annual operating profit that is almost twice as high as that of the water heater.
However, the study also reveals that, because it is relatively inexpensive to retrofit water heaters to provide flexible energy storage, water heaters have the better overall cost-to-profit ratio compared to batteries. Whereas new lithium ion batteries would need to be bought and implemented in every household, water heaters are already in most households—with the only additional cost needed to store and sell energy involve installing automated controls on the heater. Mansouri and Sioshansi found that these costs were some one-third the cost of installing a lithium battery bank.
Although it wasn’t addressed in this particular study, Mansouri added that electric companies would need to create an incentive program to compensate water-heater owners to allow their heaters to be used in this way. “We didn’t study this aspect of the problem, but the electricity industry has had decades of experience with developing incentive schemes for customers to provide other forms of electricity-demand flexibility,” Mansouri said. “The key would be to provide enough of an incentive for the water-heater owner, as well as the company that is aggregating the flexibility of multiple water heaters, to use for these types of services.”