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Two Birds, One Water Heater: How Shifted Energy and Hawaiian Electric are Helping Hawaii Meet its Clean Energy Goals

Water heaters, one of the largest energy consumers in our homes, typically perform a simple function: heating water and keeping it hot until we need it. Yet, by leveraging intelligent controls and basic signaling, the energy consumed by heating water can be shifted from high-demand to low-demand times. With 600 million electric water heaters worldwide — and expected growth in emerging markets (e.g., China and India) — water heaters have enormous potential as a networked grid resource.

Grid-Interactive Water Heaters (GIWH) can provide valuable services such as peak demand reduction, thermal energy storage, emergency demand response, and frequency and voltage regulation. While the amount of capacity available for each grid service varies by tank, region, and hot water consumption, a typical average of 1 kW of flexible capacity per heater leaves 600 gigawatts of thermal energy storage untapped in our homes. To leverage this resource, Shifted Energy, a Hawaiian start-up company, has begun to deploy their integrated solution that uses machine learning to maximize the grid service capacity of electric water heaters.

Who is Shifted Energy?
Shifted Energy’s backstory is somewhat unique. “We were founded as a spin-out of the community engagement and energy efficiency work of Kanu Hawaii, the largest sustainability nonprofit in Hawaii,” explains company founder and CTO Olin Lagon. “After seeing that traditional renewable energy programs were aimed mostly at homeowners who could afford solar, EVs, battery storage and other high-priced technologies, I wanted to find a way to engage other residents, like renters, in the clean energy movement and boost Hawaii’s efforts to reach 100% renewable energy.”

Shifted Energy was born when Lagon began developing a software-based system that could aggregate and manage thousands of electric water heaters as a virtual power plant (VPP), providing utilities with a thermal storage resource to help integrate intermittent renewable generation onto the grid. This solution allowed anyone with a water heater to provide valuable services to the utility.

Shifted Energy – in collaboration with Hawaiian Electric, the Electric Power Research Institute (EPRI), and Hawaii Energy, the local energy efficiency and conservation agency — successfully installed and administered some of Hawaii’s earliest GIWH pilots. After deploying and managing over 800 GIWH controllers from various third-party manufacturers and suppliers, the Shifted Energy team quickly discovered the challenges inherent in scaling this technology.

“We never wanted to be a hardware company,” said Shifted Energy CEO Forest Frizzell. “But after a year installing tank-mounted controllers that impacted appliance warranties and troubleshooting controller internet connections, we realized that current technology would not allow GIWH to be deployed at the scale necessary to have a real grid impact.”

With industry-leading GIWH optimization algorithms and a VPP software platform in place, Shifted Energy designed and built an in-house controller that could seamlessly scale by incorporating three key innovations:

1)   Cellular IoT chip that operates independently of a customer’s internet network and includes end-to-end integrated cyber security.

2)    Off-tank controller that splices anywhere on the electric line between breaker panel and water heater; no sensors touch the tank, no warranties are voided, and no plumbing (nor mixing valves or super-heating) is required.

3)    High-quality, high-frequency data that allows machine learning algorithms to maximize the amount of capacity available for grid services while minimizing any impact on a customer’s hot water supply.

Shifted Energy’s off-tank controller, which utilizes a VPP software platform and machine learning to maximize the grid service capacity of an electric water heater (Source: Shifted Energy)

These controllers allow Shifted Energy to:

  • Load Build: Heat water during times of excess energy supply, often coinciding with mid-day solar peaks in Hawaii, acting as a thermal energy storage device;
  • Load Shed: Prevent forecasted water heater load from overburdening the utility grid during times of peak demand, often coinciding with evening hours in Hawaii.

In August of 2019, Shifted Energy, in partnership with Open Access Technology International, Inc. (OATI) and Hawaiian Electric will provide 2.5 MW of GIWH through a recently approved Grid Services Purchase Agreement (GSPA) in Hawaii.

Even with low quantities of water heaters, load builds and load reductions can be run on the same day with high accuracy. The above image shows a group of 8 heaters consuming excess solar energy during the day and then reducing the evening peak.

Hawaiian Electric and Grid-Interactive Water Heating
“Hawaiian Electric has relied on electric water heaters as demand response devices for years,” according to Director of Demand Response Rich Barone. “Our EnergyScout program uses a one-way paging network to control about 34,000 water heaters, which deliver approximately 10 MW of controllable peak demand.”

The EnergyScout program is similar to other Direct Load Control programs run by utilities across the country, such as Duke Energy Florida, which controls about 700,000 water heaters by radio signal. Many utility-owned controllers have been in the field for decades, but because they can only receive on/off signals, it is difficult to know how many are still operational or how much capacity is provided.

Geographical breakdown of controlled water heaters and states with GIWHs across the U.S.

The Hawaii Public Utilities Commission is asking Hawaiian Electric to explore new methods for procuring demand response, regulating reserves, and providing fast frequency response. In response, Hawaiian Electric launched its Grid Services Purchase Agreement in 2018 to competitively procure approximately 16 MW of capacity.

“We have successfully deployed multiple GIWH pilot projects with Shifted Energy over the last five years, so we are confident in the technology’s capabilities,” said Yoh Kawanami, Hawaiian Electric demand response manager. “The key value propositions with two-way communications of GIWH technology are granular visibility into the current state of each asset, forecasting and provision of multiple grid services from a single device in a single day plus real-time monitoring and verification of performance during events.”

“Electric water heaters — especially residential systems — offer an invaluable collection of thermal storage resources that can be a key contributor to load flexibility,” said Barone. “OATI’s partnership with Shifted Energy, a Hawaii-based company, is an important step in helping Hawaiian Electric realize this potential while providing value directly to customers.”

A Look Ahead

OATI, a Minnesota-based smart-grid solution provider, was awarded the 2018 GSPA contract to deliver aggregated capacity from a combination of residential, commercial, and industrial customer-sited assets. Although the full portfolio of resources and providers has not yet been made public, it includes a 4 MW residential solar plus storage VPP, approximately 15 MW of commercial battery storage, as well as the aforementioned 2.5 MW of GIWH from Shifted Energy. OATI aggregates these resources to provide capacity and fast frequency response services to Hawaiian Electric.

“We are excited to have Shifted Energy join the OATI Energy Alliance and provide real-time aggregation of behind-the-meter water heater assets,” said Dr. Sasan Mokhtari, OATI President and CEO. “With Shifted Energy’s water heaters, all Hawaiian consumers can interactively power the distribution-centric grid of the future with a Grid Services Program that benefits everyone.”

“We collaborate with our customers, state regulators and policymakers, and advanced technology companies to provide low-cost, reliable electricity,” said Jim Alberts, Hawaiian Electric senior vice president of business development and strategic planning and current Board Chair Elect of the Smart Electric Power Alliance. “The GSPA framework is a new way of soliciting and procuring customer-sited resources, and we are excited to lead by example in building a grid capable of integrating 100% renewable energy.”

“Utility-scale procurement of GIWH through GSPA is a milestone in that progression, and will allow participating customers to provide fast frequency response, load building, and peak load shedding services to support the grid,” said Lagon. “The beauty of GIWH is its scalability to anyone with an electric water heater, and we are now engaging with utilities across the world that are interested in unlocking that potential capacity.”

GIWHs Among a Growing Suite of Advanced Technologies Leading the Expansion and Diversification of DR Programs Across the Country
The Smart Electric Power Alliance (SEPA) recently released their 2019 Utility Demand Response Market Snapshot report. This year’s report details the phasing out of older programs, the introduction of advanced technologies and smart devices increasing customer engagement, and the growing diversity of program offerings.

In 2018, 190 utilities reported a demand response enrolled capacity of 20.8 GW, and a dispatched capacity of 12.3 GW across two customer segments. Mass market programs accounted for 35.6% of enrolled capacity, and commercial and industrial programs accounted for 64.4%.

53 utilities reported having a water heater program, accounting for 585.6 MW of enrolled capacity across 1.3 million customers. According to SEPA’s data and industry insights, utilities in 11 states have introduced GIWH pilot programs.

Utilities and third-party aggregators are increasingly calling on demand response programs to not only improve grid reliability and save consumers money, but also to reduce carbon dioxide emissions. A growing number of utilities (e.g., Xcel Energy) have announced 100% carbon reduction goals within the past year, and demand response is key to meeting those targets. Electric water heaters are a key resource that utilities and aggregators can call on to integrate the growing penetration of renewable energy onto the grid.

“The evolution of controlled water heating from simple peak load shift appliances to true thermal energy storage distributed energy resources is now being realized,” said Lagon.

The 2019 Utility Demand Market Response Market Snapshot report is the third of three annual Snapshot reports based on data from SEPA’s 2018 Utility Survey; past reports also include the 2019 Utility Solar Market Snapshot and the 2019 Utility Energy Storage Market Snapshot.

 

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