A trial in South Australia will test the load-shifting potential of a virtual power plant of residential hot-water systems.

As exported solar energy causes increasing anxiety in cities where sometimes more than a third of houses host PV, networks are looking at any way possible to increase daytime load.

It seems counterintuitive in a world where we are encouraged to use less energy, but ramping up daytime electricity use can clear the way for more renewables in the grid – and it can be as simple as rescheduling energy-hungry appliances usually called on at other times of the day.

Air-conditioning is an obvious one, where systems can be timed to switch themselves on as PV output is peaking but no-one’s home, so that they are not all dialled up to max refrigeration levels when everyone walks in after school or work, when solar levels are waning.

Back in the early days of managing energy consumers’ behaviour someone came up with the brilliant idea of timing hot-water heaters to run overnight, so night-time demand could be bumped up a bit to make life easier for massive coal generators.

Turning that idea on its head, a new project hopes to suck up some of the excess solar in South Australia by pushing people – solar owners or not – to run their hot-water systems during the day. 

It sounds so simple it just might work.

“We’ve proved the water heater works [as a way to shift demand],” says Stephen Cranch, general manager of Rheem Australia’s renewables brand Solahart. “We want to prove now that we can aggregate it and what that means to the energy network.”

Dangle the carrot

Solahart’s SA Smart network project will test how consumers can be incentivised to participate in demand management and load shifting by controlling residential hot-water systems in South Australia.

Viewing the systems like batteries, a virtual power plant of about 2,400 water heaters will be orchestrated to manage aggregate load and lower electricity usage at peak times, take advantage of arbitrage opportunities and provide network services to the grid.

Water-heating accounts for about 23-25% of load in the average Australian home, Cranch says. 

“We’re trying to turn electric water heaters into a device that helps take up that excess energy created by solar,” he says. “The benefit for consumers is to lower energy bills and for the network is to orchestrate a fleet of water heaters when they need to.”

To be in the trial, customers must sign to Simply Energy and agree to take part in system events, such as demand response. 

Contemporary driveway parking of the big modern house

Hardware and software

In the first phase of the program, 400 participants of the SA Smart Network will receive a rebate of between $1,430 and $2,750 when they purchase a Solahart PowerStore and up to $424 in energy bill credits over two years with Simply Energy’s Hot Water Program. 

The first 400 PowerStore systems will be split evenly between solar and non-solar homes; the next 1,000 heating units, with the same smart control abilities as PowerStore units, will also be split evenly between solar and non-solar; and the final 1,000 participants will see existing heaters retrofitted with the ability to use excess solar in the case of PV-owners and connect to the VPP aggregator, again split evenly between solar and non-solar households.

Cranch describes the rebates for the first 400 as “quite generous”, where an installed PowerStore without incentives would cost about $4,500. Lower incentives for the next 1,000 participants reflects a cheaper but equivalently smart heater, he says. “We’re aiming to get [both types of heater] down to under $2,000 installed,” he says.

Combined Energy Technology will manage the data flow to the SA Power Network, with smart energy systems aiming for optimal household energy use within the constraints of price tariffs.

Cranch assures EcoGeneration participants will notice no difference in their hot water amenity. “It takes priority over everything,” he says. “We don’t want people having cold or lukewarm showers.”

Battery or water heater?

The deal is yet another lure for homeowners to lever some value from their energy habits and join the movement to actually do something about transitioning the NEM away from coal and gas.

To PV-owners in South Australia today the offer also has to be weighed against investment in a battery. Which is best? “They’re not mutually exclusive,” Cranch says. “You can have one of these and a battery.”

A battery might cost up to $15,000 installed, he says, whereas the Solahart offer requires an investment of about $2,000 after subsidies. “[A water heater connected to the project] is a very small first step to take, but considering the water heater takes up around 25% of the home’s energy use, you’re actually addressing quite a big appliance in the first place.”

Then, he says, it frees up the option of choosing a smaller battery than would have first been considered. “It just gives you more options.” Many PV-owners who look into buying a battery are put off when they see it would take up to a decade for the investment to pay for itself.

In the trial, participants will receive half the rebate from Solahart after signing up to retailer Simply Energy and on completion of installation and the other half at the start of the trial program, near the end of 2022. 

Hot but not bothered

In the event the participants’ systems are called upon to provide emergency demand response, it’s unlikely they will notice as it will be one of those scorching hot days when everyone’s taking cooler showers anyway.

“Having that fleet of 2,400 water heaters becomes quite an aggregated load,” Cranch says. “An ability to either push energy into those water heaters or take energy away from them and back into the grid is the opportunity.”

Yes, the project is a nice promotion for Rheem technology, “but bigger than that, we see this as a transition to a smart, connected product. That, to us, is clearly the future in solving some of these energy challenges. There is no slowing the solar revolution down.”

Rheem will operate the project through its VPP aggregation platform, integrated with energy retailer Simply Energy, which reports back to the Australian Energy Market Operator and SA Power Networks. The South Australia Government and the Australian Renewable Energy Agency are each pitching in $1.98 million for the $9.9 million project. 

South Australia is bursting with renewables. In the 12 months to February, wind and solar made up 60% of generation in the local grid. The Solahart project aims to harness solar that would otherwise be exported.