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New research suggests that in the future, one of the most lowly, boring, and ubiquitous of home appliances — the electric water heater — could come to perform a surprising array of new functions that help out the power grid, and potentially even save money on home electricity bills to boot.

The idea is that these water heaters in the future will increasingly become “grid interactive,” communicating with local utilities or other coordinating entities, and thereby providing services to the larger grid by modulating their energy use, or heating water at different times of the day. And these services may be valuable enough that their owners could even be compensated for them by their utility companies or other third-party entities.

“Electric water heaters are essentially pre-installed thermal batteries that are sitting idle in more than 50 million homes across the U.S.,” says a new report on the subject by the electricity consulting firm the Brattle Group, which was composed for the National Rural Electric Cooperative Association, the Natural Resources Defense Council, and the Peak Load Management Alliance.

The report finds that net savings to the electricity system as a whole could be $ 200 per year per heater – some of which may be passed on to its owner – from enabling these tanks to interact with the grid and engage in a number of unusual but hardly unprecedented feats. One example would be “thermal storage,” which involves heating water at night when electricity costs less, and thus decreasing demand on the grid during peak hours of the day.

Of course, precisely what a water heater can do in interaction with the grid depends on factors like its size or water capacity, the state or electricity market you live in, the technologies with which the heater is equipped, and much more.

“Customers that have electric water heaters, those existing water heaters that are already installed can be used to supply this service,” says the Brattle Group’s Ryan Hledik, the report’s lead author. “You would need some additional technology to connect it to grid, but you wouldn’t need to install a new water heater.”

Granted, Hledik says that in most cases, people probably won’t be adding technology to existing heaters, but rather swapping in so-called “grid enabled” or “smart” water heaters  when they replace their old ones. In the future, their power companies might encourage or even help them to do so.

Typically, a standard electric water heater — set to, say, 120 degrees — will heat water willy-nilly throughout the day, depending on when it is being used. When some water is used (say, for a shower), it comes out of the tank and more cold water flows in, which is then heated and maintained at the desired temperature.

In contrast, timing the heating of the water — by, say, doing all of the heating at night — could involve either having a larger tank to make sure that the hot water doesn’t run out, or heating water to considerably higher temperatures and then mixing it with cooler water when it comes out to modulate that extra heat.

Through such changes, water heaters will be able to act like a “battery” in the sense that they will be storing thermal energy for longer periods of time. It isn’t possible to then send that energy back to the grid as electrical energy, or to use it to power other household devices — so the battery analogy has to be acknowledged as a limited one (though the Brattle report, entitled “The Hidden Battery,” heavily emphasizes it).

But the potentially large time-lag between the use of electricity to warm the water and use of the water itself nonetheless creates key battery-like opportunities, especially for the grid (where utility companies are very interested right now in adding more energy storage capacity).

It means, for instance, a cost saving if water is warmed late at night, when electricity tends to be the cheapest. It also means that the precise amount of electricity that the water heater draws to do its work at a given time can fluctuate, even as the heater will still get its job done.

These services are valuable, especially if many water heaters can be aggregated together to perform them. That’s because the larger electricity grid sees huge demands swings based on the time of day, along with smaller, constant fluctuations. So if heaters are using the majority of their electricity at night when most of us are asleep, or if they’re aiding in grid “frequency regulation” through instantaneous fluctuations in electricity use that help the overall grid keep supply and demand in balance, then they are playing a role that can merit compensation.

“If the program is well-designed, meaning in particular, you have a well-designed algorithm for controlling the water heater in response to these signals from the grid, then what’s really attractive about a water heating program is that you can run these programs in a way that customers will not notice any difference in their service,” says Hledik.

In fact, using electric water heaters to provide some of these services has long been happening in the world of rural electric cooperatives — member-owned utilities that in many cases control the operation of members’ individual water heaters, heating water at night and then using the dollar savings to lower all members’ electricity bills.

Take, as an example, Great River Energy, a Minnesota umbrella cooperative serving some 1.7 million people through 28 smaller cooperatives. The cooperative has been using water heaters as, in effect, batteries for years, says Gary Connett, its director of demand-side management and member services.

“The way we operate these large volume water heaters, we have 70,000 of them that only charge in the nighttime hours, they are 85 to 120 gallon water heaters, they come on at 11 at night, and they are allowed to charge til 7 the next morning,” Connett explains. “And the rest of the day, the next 16 hours, they don’t come on.”

Thus, the electricity used to power the heaters is cheaper than it would be if they were charging during the day, and everybody saves money as a result, Connett says.

But that’s just the first step. Right now, Great River Energy is piloting a program in which water heaters charging at night also help provide grid frequency regulation services by slightly altering how much electricity they use. As the grid adds more and more variable resources like wind power, Connett says, using water heaters to provide a “ballast” against that variability becomes more and more useful.

“These water heaters, I joke about, they’re the battery in the basement,” says Connett. “They’re kind of an unsung hero, but we’ve studied smart appliances, and I have to say, maybe the smartest appliance is this water heater.”

Of course, those of us living in cities aren’t part of rural electric cooperatives. We generally buy our electricity from a utility company. But utilities also appear to be getting interested in these sorts of possibilities. The Brattle Group report notes ongoing pilot projects in the area with both the Hawaiian Electric Company and the Sacramento Municipal Utility District.

Thus, in the future, it may be that our power companies try to sign us up for programs that would turn our water heaters into grid resources (and compensate us in some way for that, maybe through a rebate for buying a grid-interactive heater, or maybe by lowering our bills). Or, alternatively, in the future some people may be able to sign up with so-called demand response “aggregators” that pool together many residential customers and their devices to provide services to the grid.

And as if that’s not enough, the Brattle Group report also finds that, since water heating is such a big consumer of electricity overall — 9 percent of all household use — these strategies could someday lessen overall greenhouse gas emissions. That would be especially the case if the heaters are being used to warm water during specific hours of the day when a given grid is more reliant on renewables or natural gas, rather than coal. Controlling when heaters are used could have this potential benefit, too.

Granted, these are still pretty new ideas and the Brattle Group report says they need to be studied more extensively. But as Hledik adds, “I haven’t really come across anyone yet who thinks this is a bad idea.”