For about 70 years, most electric hot water systems (HWS) in Australia have been switched on overnight to provide heating in homes using a “ripple control circuit” in a separate, controlled load circuit. This was done to absorb the “excess” coal-fired power generation and effectively created a base load for the night. Now Solar systems on private roofs together produce more electricity than any single coal-fired power plant. In Australia, hot water preparation has been partially shifted to the middle of the day in order to take advantage of the abundant solar energy available.

This can be done in two ways:

• Passive management – through timers on devices or through ripple control times specified by distribution networks in systems with controlled load circuits and tariffs.
• Dynamic management – a type of ripple control via WLAN or other means, where the hot water preparation times are set by the owner or a third party with the owner’s permission and consumption can be adapted to changing conditions.

Some load control tariffs have seen changes to daytime operation in favour of the ripple control function in some distribution networks. Passive management is a partial solution to unlock the flexibility available in HWS, but as we move rapidly towards 82% renewable generation by 2030, dynamic management or ‘smart’ HWS will be more valuable. For example, at times in winter in Victoria when solar generation is lower than usual, it may be more cost-effective to heat water when onshore and, from 2032, offshore wind generation is available.

Researchers at the University of Technology Sydney developed four scenarios for electrifying domestic hot water with flexible demand potential (see table). In the rapid electrification scenario, where no gas-fired hot water is sold after 2025, all water heaters are electrified by 2035 and can be dynamically managed. Consumers would save up to $6.7 billion per year by 2040 if 22 gigawatts (GW) or 45 GW hours per day of flexible demand were available, about two-thirds of peak demand.

Table: Scenarios for flexible demand capacity and depth for 2040

However, there are no requirements that HWS sold in Australia today must be intelligent. A consumer who wants to buy a new heat pump (HWS) cannot rely on a minimum energy performance standard (MEPS) as exists for electric storage HWS, but even this Standards date from 2012. Heat pump HWS are three to four times more efficient than resistive electrical Cervical spine, and their purchase is supported by subsidies in many countries. July 19, 2024, Minister of Energy agreed The introduction of MEPS for heat pumps (HWS) is given high priority, which is a big step, but flexibility aspects were not an issue in this decision.

Victoria is the only state that imposes device flexibility requirements – a timer – to be eligible for a subsidy for hot water preparation with a heat pump. The lack of requirements for ‘smart’ subsidised hot water systems is a missed opportunity to create a cheap and flexible demand that grows with each subsidised hot water system installed.

A new briefing from the Institute for Energy Economics & Financial Analysis (IEEFA) includes several recommendations to promote the adoption of smart HWS, including:

1. The South Australian Government should immediately stop subsidising the purchase of HWS gas.
2. The state governments of Victoria, New South Wales and South Australia are expanding their subsidy programs, and the Australian federal government is expanding its renewable energy target (RET) to include a requirement that heat pump heat pumps can be dynamically controlled.
3. All HWS sold in Australia should be required to be installed in a way that allows them to be dynamically managed, unless there is already a rooftop solar system installed where passive management may be sufficient. In all cases, flexible, smart HWS should be mandated to reduce emissions and costs to consumers. The Federal Government, in conjunction with State and Territory Governments, should investigate which of the following smart requirements for HWS should be introduced nationally:
   – Communication capability/open communication protocol, such as WiFi connectivity, especially for heat pumps (HWS) as most brands already offer this;
   –Connection to a smart meter as an alternative form of dynamic operational management;
   –Connection to a home energy management system (HEMS) as an alternative form of dynamic management; and
   – Installation of a solar diverter with timer or other control system as an alternative form of passive or dynamic management.

These recommendations are not about whether and by whom HWS are managed, but whether new HWS are intelligent. Whether a new HWS is managed passively or dynamically is up to the owner. Most HWS have been managed passively using ripple control technology for about 70 years, so this is not a new concept for distribution networks or consumers.

Given the rapid electrification of households, it is important that these HWS requirements are implemented as quickly as possible. The UTS study shows that $6.7 billion in opportunities will be missed if newly electrified HWS cannot be used as a flexible resource.

This article first appeared in Renew Economy.