Australia's energy transition is well underway. About 3 million homes have rooftop solar, and sales of mid-size electric cars are on the rise. But when it comes to households using electricity entirely with renewable energy, do we overlook an important assistive technology, the modest electric water heater?
About half of Australian households use an electric water heater, while the rest use gas. So what's so great about electric water heaters?
Electric water heaters provide an inexpensive way to store large amounts of energy, in the form of hot water. A fireplace with a 300-liter tank can store the same amount of energy as a second-generation Tesla Powerwall—at a fraction of the cost.
Our research at the UTS Institute for Sustainable Futures has found that Australians can use household electric water heaters to store the energy equivalent of more than 2 million household batteries of that type. This could ultimately save more than A$6 billion a year on our energy bills while helping us move closer to zero carbon emissions.
Our report, published today and funded by the Australian Renewable Energy Agency (ARENA), recommends that, to halve emissions by 2030 and reach net zero by 2050, We urgently need policies to quickly replace gas-powered water heaters with "smart" electric water heaters. Smart heaters can be turned on and off in response to changes in electricity supply and demand on the grid.
This means that these heaters can absorb excess "off-peak" renewable energy, especially from solar, and thus help us solve two main problems at once. They can help reduce and ultimately eliminate greenhouse gas emissions. And they can make our grid more stable by providing flexible demand that balances fluctuating supply from renewable sources.
cut emissions
There are three main types of electric water heaters. Conventional "resistive" water heaters use electricity to heat water directly. Solar water heaters use sunlight and electricity, but have become less common as newer "heat pump" devices appear. They take heat from the air and "pump" it into the water. A heat pump uses three to four times less electricity than a resistance heater.
Back in 2010, a resistive water heater typically produced about four times more emissions than its gas equivalent. The exhaust gas of the heat pump is almost the same as for the gas. That's because electric water heaters use a lot of electricity, and most of that comes from burning coal.
As we generate more electricity from renewables, this picture is changing dramatically. Australia's energy market operator, AEMO, publishes regularly updated roadmaps towards a clean energy future. In the most likely outcome, the "step change scenario", gas will become the most greenhouse-intensive hot water heating option by 2030.
By 2040, after the transition to renewable electricity is largely complete, emissions from resistive water heaters and heat pumps will be much lower than from gas-powered appliances.
Water heaters can last 15 years or more. So the amount of heaters in our homes over the next two decades depends on what we install today. Therefore, replacing gas heaters with electric ones should be an immediate priority in our energy transition.
Our work has explored a wide range of situations, each with a different combination of water heating technologies. One is the usual business establishment where gas-powered water heaters are still common. In the alternative scenarios, gas would be phased out over the next 10–20 years.
We've found that replacing gas with an electric water heating system not only helps us reach net-zero emissions sooner, but it also saves us money.
Gas is expensive and couldn't be much cheaper. Abundant renewable energy provides a surplus of cheap electricity that a water heater can absorb. Seizing this opportunity could save more than $6 billion per year on our energy bills by 2040.
Strengthening grid stability
Solar and wind are currently the cheapest technologies we've ever had for generating electricity. But to maintain a stable electricity system, we need to meet demand with fluctuating supply from renewable sources. Batteries provide part of the solution, but are still relatively expensive.
Electric water heaters provide a much cheaper way to store large amounts of energy and provide the flexibility the grid needs.
Our research shows that, compared to a typical enterprise baseline, a scenario that emphasizes demand flexibility using a smart electric water heater could provide an additional 30GWh of demand capacity. flexible demand on a daily basis. This equates to more than 2 million household batteries on the National Electricity Market, which supplies power to eastern and southern Australia.
Back to the future to heat water
Since the 1950s, "off-peak hot water" has seen electricity providers in Australia turn off home water heaters during the day and turn them on at night to better match supply and demand. In return, the customer gets a huge discount.
In recent decades, we have avoided using electric hot water during off-peak hours, as incentives dwindle and more and more homes use natural gas.
When electrifying hot water, which technology should we apply: resistor or heat pump? The answer is both.
Our research explores the trade-off between a flexible high impedance water heater versus a highly efficient but less flexible heat pump.
Heat pumps use less electricity and cost less to operate. In places where electricity prices are high or electricity flow is limited, it makes sense to use heat pumps. However, they have a higher upfront cost and are not suitable for all homes. For example, many apartments lack access to proper outdoor space.
And because they use less electricity, heat pumps offer less flexibility. As renewable energy, especially solar, increasingly powers our grid, the capacity of resistive heaters to absorb excess "off-peak" renewable energy is a big advantage.
With the right policies and market reforms, we will all benefit from a system that once again rewards customers with low-cost electricity at off-peak hours in exchange for network operators being able to shut down and turn on our water heater when needed.
