Using Hot Water to Balance the Grid – CleanTechnica

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The humble electric hot water system, hidden usually in a corner of the garage, or even sometimes stuck outside the house in Australia, is being repurposed to balance the grid. For years, we have used tariff 33 to switch on our hot water systems at night for lower-cost electricity from nighttime excess coal-powered generation. Now, the grid is becoming more complicated. Renewables are less predictable. Time to change.

The Australian Renewable Energy Agency (ARENA) has part-funded PLUS ES, AGL, and the University of New South Wales for a two-year trial to “utilise 20,000 existing smart meters to dynamically orchestrate hot water (HW) load.” ARENA is contributing about half the cost of the project, almost AUD$3 million. The trial has taken place in South Australia, the most renewable energy advanced state in Australia. This is the first time that controlled load hot water has been used as a flexible load to “address minimum demand challenges at this scale.” Heating up the water for our daily shower is one of the largest loads on our grid — similar to the electric stove, and charging our Tesla — and it’s very predictable for the NEM (National Electricity Market). 

According to NEM Watch, at this point in time, South Australia is drawing its energy from the following sources: 1.3 GW small solar, 573 MW large solar, 495 MW wind, and only 80 MW of gas.

PLUS ES and AGL have shown that by dynamically managing customers’ hot water systems, they can not only support grid stability, but also reduce costs for the consumer. “This demonstration will tackle the fast-emerging challenge of balancing supply from distributed generation and minimum demand periods, due to the increasing adoption of rooftop solar PV.”

CleanTechnica readers may remember AGL from articles detailing its takeover by Atlassian founder Mike Cannon Brookes. Since then, it has taken on a much “greener” stance. PLUS ES plans to allow AGL access to its smart meter technology to control hot water systems for “optimal demand management.” AGL will be enabled to move 48 MW of residential demand across 20,000 customers in South Australia. This is expected to manage spot market pricing, reducing costs.

To quote ARENA: “The trial involves development of a technical enabler for retailers to dynamically control hot water load in near real time. This will allow retailers to target periods of low wholesale pricing, high renewable energy generation, and/or shift HW load to access lower wholesale pricing and maintain grid security. This solution will address challenges posed by midday demand and generation imbalance and will drive smart meter adoption in the market.”

The trial involves only 20,000 HW systems out of a total of 300,00 in South Australia alone. According to PLUS ES, this equates to “an estimated 1,080 MW of untapped Distributed Energy Resource load that could be utilised should the program be expanded state wide.”

AGL Chief Customer Officer Jo Egan expects that the learnings from this project will be able to scale across all states of Australia. I wonder if this means the end of the duck curve for solar?

ARENA is funding the development of two software platforms — a Load Management Portal and an Application Programming Interface (API). The LMP will allow AGL as the electricity retailer to view, manage, and execute commands for controlled loads. The API allows the retailer to integrate with a homeowner’s smart meter for “near real time orchestration.” PLUS ES technology will enable planned demand shifting — for example, nighttime to daytime to soak up excess solar — and also real-time demand shifting. Real-time demand shifting may be necessary depending on the NEM.

Demand response is a way of balancing supply and demand on the electricity grid. It can be the voluntary reduction or shift of electricity use by customers. For example, my house electricity is supplied by AGL. On very hot evenings, we are asked to reduce our use of electricity during peak hours. For this, we receive a $AU5 or $AU10 credit to our power bill. We achieve this by shifting our use from evening to midday — cooking our main meal in the middle of the day. Much better than the alternative forced restrictions or blackouts that Brisbane endured in the ’70s.

Don’t worry, demand response doesn’t mean no power, just minimal. We still watch the TV and use a fan. The fridge is still running. Lights are okay — though, it would be fun to use candles. We avoid using appliances that draw a lot of power, like the stove, the sandwich toaster, and our antique, inefficient, power-sucking air conditioner in the media room. Of course, we don’t charge the car or run the hot water system. We get plenty of warning and it is possible to cool the house down with the air conditioners prior to the time that the power saving event starts. It can be quite fun.

We are retired and can work around these things, but with smart appliances that run on timers, there is opportunity for the workers to participate also. It just takes a bit of planning. As we move into summer and daily temperatures in Brisbane are over 30 degrees Celsius with high humidity, I expect these notifications to come more often.

Demand response is much cheaper than building larger power plants, and the attendant distribution network. “DR is commonly used in the USA, Japan, New Zealand and the UK. In some American states it is used to meet over ten per cent of peak demand for electricity. New Zealand began using DR in 2007 and now meets over 16 per cent of peak demand through DR programs.”

This recent report from the University of New South Wales spells out the learnings from the trial and points the way forward. It points out that 30% of the NEM has access to smart meters and it is expected that this will reach 100% by 2030. “Smart meters provide visibility and control of DEWH loads in near real-time at the household level.” DEWH includes both resistive immersive heaters and heat pumps. So far, heat pump hot water systems only comprise 2% of the fleet. They have lower rated power and longer operating times. These longer daily operating times make them a good candidate for load shifting to solar generation.

The report explains that there were some issues with heat pump control, and AGL will be refining the process of control as they roll out this scheme to other regions. There were a negligible number of customer complaints. A followup survey indicated that the majority of customers did not notice changes to their hot water availability. Only 0.3% of customers opted out of the program.

As the program is rolled out through the NEM, AGL recognises the need for “better education about controlled load and more detailed explanations on the benefits of hot water orchestration.”

Also highlighted was the need for stricter cybersecurity around the transmission and sharing of large amounts of data. The trial ended up dealing with only 14,000 systems which required “robust data management systems and efficient data transfer protocols.” How much more so when it is rolled out to the whole of South Australia’s 300,000 systems and then the rest of Australia?

Due to the way hot water systems have been installed in Australia, it proved difficult to pass on cost savings to individual households. However, the trial showed that cost savings are available systemically and can be passed on to the community.

There is also the benefit of CO2 emissions savings. “Throughout the trial, it is estimated that around 0.6 Gt-CO2 emissions were saved as a result of shifting DEWH demand into the day. Compared to traditional controlled load with nighttime heating, the trial resulted in 14.3% reduction in associated emissions. Based on the assumption that the studied DEWH control can be successfully rolled out across the NEM, the potential emissions savings are calculated to be 212 Gt-CO2/year representing an 8% of emissions reduction associated with water heating. Considering future electrification scenarios, the emissions savings potential increases to 974 Gt-CO2/year.”

The consumer will not be asked to contribute financially to this. The consumer and the retailer will both benefit financially. Not to mention the cost savings from not having to expand the grid. Now that the trial has proven successful, AGL has plans to roll out the process to other regions. The report notes: “It will be interesting to see how this type of smart meter and retailer controlled hot water flexible demand will function in other DNSP regions as some DNSPs may want to retain control of the electric hot water fleet … there may be significant wholesale cost benefits for the retailer/aggregator when shifting aggregate hot water demand into solar generation window.

“To make the controlled load financially more attractive for a wider range of households (including ones with rooftop solar) and maintain the controlled load fleet for the use of flexible demand, AGL is considering new tariff offers to pass on some of these wholesale benefits onto users as the fleet of controlled DEWH systems expands. As a result, even though smart meter based DEWH control won’t allow solar soaking at the site level, households will still be able to benefit from cheaper electricity prices for water heating during the day.”

The humble hot water system, combined with IT and some solar panels, may be a cost-effective way to reduce CO2 emissions. Another weapon in the fight against climate change. The future is bright, electric, and possible.