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Demand response with grid - interactive water heating

demand response, grid enabled water heaters, pumps, balance, flexible grid, electricity consumption, peak load, balance the grid, electricity distribution,Grid Interactive Water Heater

Balancing the grid - a challenge for future electricity distribution.

An extreme hot wave hit Europe, Southwest USA and parts of Asia this summer. The records are a scorching reminder that we are really experiencing climate change nowadays. Doctors warn people about negative effects on health caused by hot weather. In the meanwhile energy experts alarm that the security of national grid is highly dependent on the changing weather. Climate change is projected to have severe impacts on the frequency and intensity of the peak electricity demand across the United States.

demand response, grid enabled water heaters, pumps, balance, flexible grid, electricity consumption, peak load, balance the grid, electricity distribution,Grid Interactive Water Heater Figure 1: Projected change in intensity of peak load in USA. Color reflects projected percentage increases in the daily peak load due to temperature rise by end of the century (Source: Auffhammer, M., P. Baylis, and C.Hausman)

The U.S. Energy Information Administration (EIA) estimated that in 2016, space cooling (air conditioning) was 18% of the annual household electricity use, followed by water heating - 9%. Typically, monthly home electricity consumption peaks in July and August when temperatures and cooling demand are at its highest. These demand peaks put significant stress on the electricity grid and increase the chance of blackouts. Additionally, a new record was set in March 2017 where wind and solar power accounted for 10% of the total electricity generation in the US (wind - 8%, solar - 2%, EIA’s Electric Power Monthly).

Smart solutions

In fact, there are two types of peaks: supply peak caused by renewable generation and demand peak caused by residential consumption. Usually, these peaks do not coincide and it is a real technological challenge for grid operators to find the balance. A possible solution is an investment in additional reserve generation capacities but this will raise electricity prices for consumers and could also cause additional negative climate effects. However, smart grid technologies could give a better solution. Advances in batteries or the use of electric vehicles or water heaters for storage would reduce fluctuations. As such, although average generation would not be directly impacted, peaks would diminish.

According to the EIA’s definition, Demand response is the opportunity for electricity consumers to intentionally shift or reduce their load either in response to price signals or in exchange for an incentive. New smart appliances and technologies are now empowering smaller consumers (or energy service providers on behalf of consumers) to manage their own electricity demand. In 2015 the U.S. House of Representatives passed the changes in Energy Policy and Conservation Act (EPCA) in order to provide additional energy conservation standards applicable to grid-enabled water heaters for use as part of an electric thermal storage or demand response program.

Demand response strategies

Water heaters are considered to be behind-the-meter “flexible load”. The authors of the report “The Hidden Battery Opportunities in Electric Water Heating” describe three possible strategies:

  • Peak Shave - the water heater is managed from a distance only for a limited number of days of the year when the system peak is likely to occur.
  • Thermal Storage - on a daily basis the water heater heats at night and then is curtailed during highest priced hours of the day. This strategy is used to capture energy value through energy price arbitrage.
  • Fast Response - the water heater offers frequency regulation into the wholesale ancillary services market while heating water during off-peak hours, on a daily basis. The water heater responds to a signal from the system operator and in a matter of seconds can increase or decrease load depending on the need.
demand response, grid enabled water heaters, pumps, balance, flexible grid, electricity consumption, peak load, balance the grid, electricity distribution,Grid Interactive Water Heater Figure 2: Bobbie retrofits any brand of water heater into grid-interactive

Grid operators can apply each of the three demand response strategies with the help of the smart water heater controller Bobbie, the device which turns any water heater into grid interactive water heater (GIWH). Bobbie has an open API and shows how much energy could be stored in the water heater. It allows ON / OFF functionality from distance.

Although demand response may still sound theoretical and regulatory proceedings have just been applied there are quite many pilot projects that prove the efficiency and economic benefits of demand response strategies.

See real use cases for demand response projects with water heaters here:

PJM, Kootenai Electric Cooperative, Central Electric Coopoerative , Great River Energy, Hawaiian Electric’s Grid-Interactive Water Heater (GIWH) initiative


Auffhammer, Maximilian, Patrick Baylis, and Catherine Hausman. 2017. “Climate change is projected to have severe impacts on the frequency and intensity of peak electricity demand across the United States”. Proceedings of the National Academies of Sciences. 114 (8) 1886-1891. http://www.pnas.org/content/114/8/1886.full.pdf

EIA’s Residential Energy Consumption Survey (RECS) https://www.eia.gov/consumption/residential/

EIA’s Electric Power Monthly, June 2017 https://www.eia.gov/electricity/monthly/

Ryan Hledik, Judy Chang, Roger Lueken, 2016, “The Hidden Battery Opportunities in Electric Water Heating” https://www.eenews.net/assets/2016/02/10/document_gw_03.pdf


MClimate at E-Qube Start Up Challenge 2017 by Estra

E-Qube, start up , Estra
MClimate: finalist of E-Qube Start Up Challenge 2017 Our company was one of the finalists in the innovation start-up contest E-Qube 2017 organized by the Italian multi-utility company Estra S.p.A. in partnership with Biba Venture Partners, based in Barcelona. Estra S.p.A. is one of the leading multi-utility companies in the energy sector in Italy. It provides services such as the supply of natural gas, LPG, and electricity; distribution of natural gas and LPG; energy services and telecommunications. More info about Estra here: Estra S.p.A. Biba Venture Partners is an innovative agency that supports the development of strategic partnerships between big corporations and start-up companies. The organizers searched to find best start-ups in the area of IoT, smart homes and buildings, smart city, energy efficiency, renewable energies, big data, business analytics and customer experience. 231 start-up companies from 40 countries applied. Only 10 companies were assessed to participate in the finals which took place on 12-13 July in Florence, Italy. During the final pitching session, our CEO Lyubomir Yanchev presented MClimate smart devices and what benefits utilities can get through home automation in order to support their customers in saving energy as well as to lower their grid maintenance costs through demand response.

The Future Of Utilities And IoT

The Future Of Utilities And IoT

How Utility Companies Can Benefit From Smart Home Devices

The rise of the renewable source connected to the grid, the development of distributed energy resource (DER) solutions, energy markets deregulation, technology innovations, new customers’ behavior, etc. are changing the traditional business model of electric utilities.

Electricity demand is slowing down

According to Eurostat report in the between 2004 and 2014 household electricity consumption fell by 1,3 % in all EU-28 countries. There was a great reduction in Belgium (almost 29%), Sweden and UK (more than 10%). The trend of decreasing electricity demand has been observed in Germany since 2011 too. Total electricity demand in U.S.A. is projected to keep slowing down between 2016 and 2040 according to Annual Energy Outlook 2017. The reasons for this trend are different but the most important are: regulatory energy efficiency measures, as well as innovative household devices (e.g. smart home solutions) and new appliance standards.

DER solutions and independent communities

There is a growing number of energy communities in the USA which are considered to be “green power communities” – cities, villages or counties in which the local government, business, and residents collectively use green power. The European Federation of renewable energy cooperative -REScoop.eu has already a member network of 1,250 renewable co-operatives and their 650,000 citizens.

Energy efficiency policies help households save money on energy bills

EU is in the process of updating its Energy Efficiency Directive which purpose is to set 30% energy efficiency target by 2030. The reports show that energy intensity in EU industry decreased by 16 % between 2005 and 2014. In the meanwhile European households are expected to save almost 465 euros annually from electricity bills due to more efficient appliances.

New customers

Electric utilities experience customer behavioral changes. According to the latest Accenture’s (https://www.accenture.com/us-en/insight-new-energy-consumer-thriving-new-retail-ecosystem) Energy Consumer Research:
  • 82 % from interviewed customers would be more satisfied if offered an in-home system that automatically limits electricity usage at peak periods.
  • 79% percent would be more satisfied if offered an in-home device providing energy usage feedback and suggesting customized products and services.
  • 61 % would sign up for an app that can remotely monitor and control home elements
Citizens are becoming more active and demanding. The prosumers (electricity consumers who produce their own energy) do require more energy democracy and are pushing the transformation of energy markets.

Technology innovations

Due to new technologies and connected renewables, the grid is turning from a “wire for electricity” to a platform with connected devices, prosumers, smart meters, electric vehicles. Data collection and analytics, smart and interconnected devices will allow advanced energy management and smarter energy use, reducing utilities’ kWh sales even further.

The “utility death spiral”

All these factors are just a part of the big picture of the energy revolution that is going on. Peter Klein calls them “disruptive challenges”. When grid costs go up while in the same time capital costs for renewables go down, more customers are willing to be energy self-supplied. This leads to higher grid costs for the remaining customers who will have the reason to also leave the grid. In the meanwhile assets’ maintenance costs are a permanent part of the utility budget. This repetitive process is called the “utility death spiral”
In order to escape from the utility death spiral, traditional electric utilities need to adopt new business models and go out of the box. Smart home devices offer differеnt ways for saving utilities operational costs or improving customers’ engagement. Here are some examples:
  • Demand response: Smart thermostats like Nest or devices like Bobbie help utility companies to develop demand response programs and shave the peaks, as well as lower the costs for balancing the grid.
  • Customer behavior tracking: through smart home devices utilities can collect ” behind -the- meter” data about their customers’ behavior at home and develop personalized tariffs and energy engagement programs.
  • Sales business opportunities: already many utilities are selling third party’s smart devices and products to their customers and thus generate additional revenues, e.g Italian multi-utility Estra, San Diego Gas and Electric, Scotish utility, etc.
Smart home devices give a great opportunity to utilities to grow by developing new services (e.g help customers manage electricity bills) or managing their costs (e.g. demand response). However, electric utility companies do not need to become IoT market players but establish partnerships with third party companies providing home automation and take advantage of the growing home automation market.