21 August (Australia): If more consumers had the flexibility Australia’s abundant solar energy for its daytime hot water would reduce electricity bills and ease the strain on the power grid.says the Institute of Energy Economic and Financial Analysis (IEEFA).

Solar panels on private roofs now produce more electricity than any single coal-fired power plant in Australia. This has pushed wholesale electricity prices into negative territory during the day, while demand remains highest during the evening peak period between 4pm and 8pm.

Hot water systems, which account for a quarter of a household’s electricity consumption, offer the largest and cheapest solution to this imbalance by shifting the need for hot water to the middle of the day, so a new briefing from IEEFA.

“The introduction of flexible demand can reduce household energy costs and bring benefits to the electricity system as a whole.”, says Dr. Gabrielle Kuiper, guest author of IEEFA and author of the briefing paper.

The concept of flexible demand is not new. Since the 1950s, it has been used in electricity distribution networks via so-called ripple control, whereby “surplus” coal-fired electricity is used to heat water in households at night during off-peak times.

Household hot water needs can be adapted to times when renewable energy is abundant in two ways:

• Passive management – by timers built into the device or by ripple control times specified by the distribution networks in systems with controlled load circuits and tariffs or
• Dynamic management – through adjustable ripple controls or WiFi controls that can be set by the owner or third parties and adapted to changing conditions.

Dynamic management offers maximum flexibility using apps, touchscreens or web portals – all functions that are immediately available in intelligent hot water systems.

“You can treat a home’s hot water system like a heat battery and store the heat in the hot water until it is needed,” says Dr. Kuiper.

As more Australian homes become electrified, it is an ideal time to introduce standards and incentives to encourage and support the use of smarter, more efficient hot water systems.

“The UK government should work with state and territory governments to explore what ‘smart’ requirements for hot water systems should be introduced nationally,” says Dr Kuiper.

An analysis by IEEFA has found that the average household in Victoria, where gas heating is widespread, could save $1,200 a year in energy costs by replacing gas appliances at the end of their life with efficient electric alternatives. Flexible water heating also offers further savings.

“We know there are cost savings to be made, particularly for consumers who heat water with their own solar systems, take advantage of ‘solar sponge’ retail tariffs during daytime hours, or participate in retail demand response programs,” says Dr. Kuiper.

“Flexible hot water supply not only reduces costs for owners, but also for the entire system when it is dynamically controlled to absorb renewable energy when it is in abundance and grid capacity is available. In this way, flexible hot water supply can reduce bills for all users of the electricity system.”

The subsidies offered for hot water systems across Australia lack coherence or consistency, according to Dr Kuiper. South Australia still appears to be supporting the installation of “efficient” gas systems, while Victoria is the only state that requires flexible demand management to receive a heat pump Hot water Subsidy.

“The lack of government subsidies for hot water system management requirements is a missed opportunity to create low-cost, flexible demand that grows with each subsidised hot water system installed,” says Dr Kuiper.

“Beyond these changes, a national strategy for domestic hot water is needed, including national action on workforce, vocational training and regulations.

“Given the rapid electrification of households, it is important that the requirements for flexibility and energy efficiency in hot water are implemented as quickly as possible.. By prioritising these actions, we are future-proofing Australian households by synchronising their electricity needs with a growing, variable supply of renewable energy.”

Read the report: Australia needs more efficient and intelligent domestic hot water systems

Media contact: Amy Leiper (email protected) +61 (0) 414 643 446

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) studies issues related to energy markets, trends, and policy. The Institute’s mission is to accelerate the transition to a diverse, sustainable, and profitable energy economy. (ieefa.org)