“Community Storage” Could Reduce Grid Costs

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Originally published on RMI Outlet.
By Mark Dyson

How Utilities are Taking Advantage of Customer-Owned Energy Storage and Demand Flexibility

Energy storage is one of the hottest topics in the electricity industry today. As battery costs decline, many actors are recognizing the huge potential of storage to lower the cost of the grid and become a booming, multibillion dollar market. But although Tesla and its competitors capture all the headlines, it’s always worth noting that energy storage can come from multiple sources—not just batteries—and there are many ways to bring the technology to market.

blog_2016_04_18-1Now, a promising new initiative launched by a coalition of industry stakeholders aims to promote the concept of “community storage” in utilities across the U.S. Community storage programs let utilities aggregate customer-owned, behind-the-meter resources like water heaters, electric vehicles, and batteries to provide services to the grid. In doing so, these programs help reduce the cost of maintaining and upgrading the grid, and help lower customers’ bills.

Energy storage can provide many sources of value

Distributed energy-storage resources used in community storage programs can provide many services to customers, utilities, and the grid as a whole. In RMI’s 2015 report The Economics of Battery Energy Storage, we catalogued 13 different sources of value that storage can provide, including backup power for a single family home, reducing peak load at the utility level, and helping balance energy supply and demand at the regional scale.

These services must be provided with some kind of infrastructure, whether it’s batteries or traditional assets like power plants, transmission lines, and distribution substations. But regardless of how you do it, maintaining the grid costs money. Utilities in the United States make investments on the order of $100 billion per year on new grid infrastructure and system upgrades in order to improve reliability and meet growing peak loads. But as battery cost declines continue, utilities and energy-storage companies are increasingly interested in using storage to offset some of that traditional-infrastructure spending, because they recognize that storage can be a cost-effective alternative.

There are many ways to store energy

Batteries may be the most versatile way to store energy, and their costs have come down dramatically, but they still cost thousands of dollars and require time to secure the necessary permits and to install and commission them.

However, there are other lower-cost ways to store energy that don’t rely on a dedicated battery system. As RMI explored in our report The Economics of Demand Flexibility, it’s possible to change the timing of when existing loads draw power from the grid without disrupting the service that those loads provide to customers. By doing so, loads like water heaters, air conditioners, and electric vehicles can provide virtual energy storage at very low cost and at very large scale.

How large a scale? Take residential water heaters as an example. Approximately 47 million American homes use electric water heaters (as of 2009, the latest data available). Assuming the average storage-tank size is 40 gallons and the heater raises water temperature by 60° F, Americans’ water heaters represent a 270 gigawatt-hour (GWh) storage resource. In other words, the U.S. residential water-heater storage resource is over 150 times larger than the current U.S. battery market, which has deployed or announced about 1.5 GWh of battery storage capacity as of early 2016. In addition, storage in water heaters can be tapped at very low cost; based on our research, it takes only a few dollars in parts, installed at the factory, to allow a water heater to communicate with, and be controlled by, grid operators.

“Community storage” can help bring demand flexibility to scale

Recognizing the scale of resources like water heaters and the range of services they can provide to the grid, utilities are increasingly interested in tapping that value and bringing this resource to scale. To do so, a diverse group of industry stakeholders formed the Community Storage Initiative earlier this year.

The Community Storage Initiative is focused on building the case for demand flexibility-like programs for cooperative utilities, or co-ops. Co-ops are owned by their members, meaning that utility cost reductions are passed directly to customers. In addition, co-ops serve rural areas, which tend to have a higher concentration of electric water heaters suitable for grid control (natural gas is usually not available in rural areas). For co-ops in the Midwest and Western region of the U.S., utility-sponsored programs for behind-the-meter storage can make a lot of sense, since organized energy markets—which successfully promote storage in other regions of the country—don’t serve these regions.

The fact that this initiative is being championed by such a diverse group of interests speaks to the broad appeal of community storage. The sponsors include:

Focus on community benefits

Just as utilities are leveraging community-scale solar to bring clean energy to their customers at the local level, utilities can similarly help deliver the benefits of energy storage to their customers.

By taking advantage of behind-the-meter storage technology and demand flexibility, utilities can reduce the cost of the grid, save their customers money, and reduce carbon emissions (mainly by helping integrate variable resources such as wind and solar into the grid). For cooperative utilities in particular, these benefits accrue directly to customers, ensuring that the value of storage is shared with the broader community.

Image courtesy of iStock.

Reprinted with permission.

Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

CleanTechnica Holiday Wish Book

Holiday Wish Book Cover

Click to download.

Our Latest EVObsession Video

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it!! So, we've decided to completely nix paywalls here at CleanTechnica. But...
Like other media companies, we need reader support! If you support us, please chip in a bit monthly to help our team write, edit, and publish 15 cleantech stories a day!
Thank you!

CleanTechnica uses affiliate links. See our policy here.


Since 1982, RMI (previously Rocky Mountain Institute) has advanced market-based solutions that transform global energy use to create a clean, prosperous and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables. Please visit http://www.rmi.org for more information.

RMI has 419 posts and counting. See all posts by RMI

35 thoughts on ““Community Storage” Could Reduce Grid Costs

  • It is important to realize that a 40 gallon electric hot water tank stores about 6 kwh. About the same as the Tesla powerwall and about the same lifespan of about 12 years. The cost: $400 electric tank; $3000 powerwall. Now, they do perform different functions but the priority should be given to heat storage.

    • I wonder about the overall energy efficiency. Much like hydrogen and fuel cells, converting electricity to heat for storage in water heaters is not a perfect equation. A huge amount of energy is poured in to generate the heat in the first place…and there are losses due to cooling – especially when the delta between ambient and stored temp is high.

      I like the idea of demand response capability but the power can’t be extracted back out. Seems interesting…I need more coffee and more time to ponder this…

      • In a well designed tank, not your grand dad’s, the loses are not that high when shifting load several hours. Now if trying to shift weeks yes not so good.

        • That makes tons of sense. I wasn’t thinking electric + Tank water heaters but yeah…seems like an easy win 🙂

      • In these cases, they’re taking advantage of existing electric water heaters in 40% of households (I didn’t know it was that high) and just shifting the time the water is heated.

        Example: Look at california’s daily load now with 7.4GW of solar generation peaking every day with nowhere to go and some is being curtailed mid day at times. Then, the sun goes down, solar drops off, and demand goes up in the evening – fossil plants fire up hard. Not a hypothetical concept – it’s happening every day in California right now. Program these tank heaters to overheat mid day so that there’s enough hot water to ride out the evening and even the next morning. Make sense? Here’s a visual for yesterday’s mix: http://content.caiso.com/green/renewrpt/DailyRenewablesWatch.pdf

        Assume: electric water heaters have perfect insulation – not a perfect assumption, but not a bad one for a few hours. Also, assume that people don’t care that the temperature fluctuates a lot – this is actually currently problematic without some new plumbing devices to hit the market that would mix cold water with the output to maintain a steady temperature.

        • California’s daytime demand nowadays is around 25 GW (because ACs aren’t running much yet; watch daytime demand spike when it gets warmer again), so a few GW of solar definitely have plenty of loads to go to; what makes you think otherwise??

          • You’re exactly correct – I totally agree – PV is only being curtailed in the springtime for now and in the summer AC will gobble it all up. Having said that, on a path to zero fossil, storage and time shifting become a real technical and economic issue and any idea is worth considering. What’s cool about water heating is that it could be far cheaper than batteries or pumped hydro. Limited in applications and scale, but if it’s cheap, use it.

        • How would you deal with the risk of scalding yourself if you happen to be home one afternoon and wash your hands?

          • Yes – they failed to mention this. An automatic mixing valve to maintain steady temp would need to be mandated in code, but first made in mass quantities cheaply. Many jurisdictions around the world now mandate similar devices for shower valves and they’ve become super cheap and common.

    • Electric hot water systems are used for energy storage in Australia. Because of coal power.

      You’re already suspecting things are going to get really stupid in this story, aren’t you?

      Coal power had all these dirty power stations that didn’t like to be shut down when demand was low, so they introduced off-peak hot water. People could have their electric hot water systems wired up to it, and late at night a signal would be sent through the power lines to turn it on. This signal was called a ripple. They even put a timer in the heater so they would start at random times and not all turn on at once.

      But the randomness was not random enough.

      Here in South Australia yesterday peak grid demand was at 1:00 am in the morning when our off-peak hot water systems started turning on. And our minimum grid demand was at about 12:30 pm in the afternoon when rooftop solar was providing 26% of all electricity use.

      People with rooftop solar can put their electric hot water systems on a timer so they come on during the day, or use a more expensive charge controller. However, last time I checked it made more sense to spend the money on extra solar panels as the charge controller was pricey.

      Electricity retailers are now starting to switch off-peak times to the middle of the day, which helps, but we still have plenty of hot water systems that will be switching on at around 1:00 am for decades to come.

      • Thanks. Very interesting and informative.

      • Was gas heated water mandatory in South AUS.

        In Vic I think they banned electric hot water tanks for new homes, but then the authorities realised that people can use electrons from solar panels to heat water without CO2 emissions – and legalised electric hot water tanks again.

        • States have gone back on forth on this, with an important factor being that electric hot water systems are manufactured in Australia on account of how they contain a lot of empty space which keeps their shipping cost high.

          • But do you know what was the situation in South AUS.

            I have seen fairly new houses in Adelaide (about 10 years old) that have instant/continuous gas hot water.

          • Properties with gas are not allowed to install conventional electric hot water systems in South Australia . They must install gas water heating, solar thermal hot water (electricity boost okay with this), or a heat pump system.

          • Impressive. In Sydney, we’re free to be total bastards. In St Ives, people who leave their garden lights on all night are well regarded. The lights are ‘pretty’.

          • Solar garden lights are inexpensive and come in all sorts of sizes and shapes. If there’s any push to cut down on wasteful electricity use the availability of alternatives to using grid power for decoration should be pushed.

            Easiest way to change a behavior is to give people an alternative, acceptable way to accomplish the same goal.


          • I don’t think it’s a technological problem. I think it’s a problem that every person in Sydney who owned a house prior to the recent real estate boom is now a millionaire (or at least half way there). For many, small price signals have zero affect. They’re thinking about whether to holiday in Bali or Thailand, not whether to save a few bucks on the power bill.
            I’d like to see (phased in) outright bans on more things – like petrol mowers and carbon positive concrete. There is a precedent – incandescent light bulbs were banned:
            It’s hard to get traction however – people (urged on by the industries affected) are quick to scream “Nanny State”.

    • How do you tap into the energy of a hot water heater? I can see using it for heating if you install hot-water baseboard, but beyond that?

      • “How do you tap into the energy of a hot water heater?”

        Wash hands, take shower, do laundry, wash dishes.

    • Everyone, read vensonata’s post above. This illustrates just how compelling this idea is.

      Water heating may have limited versatility, but if the storage and time shifting ability is that much cheaper, it’s 25 years ahead of batteries – take the idea and develop it and run with it

  • The water heater in my house is a pretty dumb device. It heats water to a certain temp and turns itself off. Once the water goes below as certain temp it kicks back on and runs until it reaches it high side of the scale. I could see how you could save money making a smarter one that tracks usage and current costs to reduce load when costs are less. I could even see the idea of over heating the water when rates are low and putting in a protection circuit the will mix a little cold water in when the water is in an overheated state.

    But the question is how much would one really save and how much of that saving will be eating up by additional cost of the unit?

    • Domestic hot water is a first choice for energy storage because it is 365 days at approximately regular consumption unlike space heating and air con. A tank vs tankless is also much more amenable in conjunction with rooftop PV for self consumption vs export to the grid. By the way PV is also better ROI than a heat pump because the PV lifespan is twice the heatpump’s. PV is also generally better than solar hot water these days for maintenance and price per kwh. It is a match made in heaven…PV and electric hot water tank!

      • Counterproductive generalizations and preconceptions. Furthermore, your own situation doesn’t reflect most others’; local climates, rates, etc vary a lot.

        PV, heat pumps and solar thermal aren’t somehow mutually exclusive at all — they can coexist and complement each other very well actually.
        [In my case, the heat pump will tackle space heating/cooling though; the water heating is solar direct].

        Use the best tools for the job.

    • They are smarts one on the market now, and in fact there is a US federal tax credit for getting smart. The controller smarts are a very small chip. But I have not priced a unit so can’t give a relative price.

    • “overheating water when rates are low” and “mix cold water when overheated” – yes that’s exactly the idea. It doesn’t save any energy per-se, it just time-shifts consumption – aka “storage”. power that would have been consumed anyway to heat water, but time-shift it earlier when rates are cheaper.

      • Well it could really make a difference in some area’s like Austria where during the day when solar is producing the most some area will actually go to zero or even negative cost but during peak hours they have gone as high as a buck per kwh. I am not saying either happen on a regular bases as I live in the US so I just know what I have read.

        • Zero/negative priced electricity is unlikely in the future. It happens now only because of thermal plants which don’t want to cycle off/on and sell at a loss.

          • Yep and it happens all over the world right now. It comes with the concept of baseline production from Coal and Nukes. Coal is going away but many area are going to be keeping there Nukes running for a while.

          • Here in South Austria, sorry, South Australia, rooftop solar has meet a third of demand at times. Next decade it is expected to meet all demand at times. We will at times have zero electricity prices here without any cranky old thermal plants that don’t like to shut down. Unless of course sufficient demand for low cost electricity materializes.

    • A heat-pump water heater is more efficient than a plain old electrical resistance hot water tank.

      No idea which one you have.

      (A heat pump water heater works exactly like your fridge/AC)

  • Buy an insulating wrap. I paid $25 and it lower my gas bill $10/ month. Almost 500% after tax annual return. Best investment I will ever make.

    • To wrap around what.

      • The tank of an old gas-fired water heater, I guess.
        (I’d hope that current ones are insulated enough that a simple water heater blanket doesn’t make much difference).

        • Gas fired tank heaters are inherently inefficient (like 50%) because there’s a big chimney up the center convecting air 24/7 whether hot water is being used or not. Wrap on a gas tank is useless. Tankless alleviates all this and the heat exchanger is 95%+

Comments are closed.