Electric Thermal Storage vs. Heat Pump Water Heaters

Posted by Anna Jursik  |  Date November 1, 2013

Contributing Author: Ben Schoenbauer

Which residential water heating technology is best for meeting electricity savings goals? It will depend if the goal is reducing total consumption or lowering peak demand. 

In Minnesota, utilities run Conservation Improvement Programs for two types of electric water heaters. Heat pump water heaters remove heat from the surrounding air and transfer it to water. Moving heat requires less energy than generating it directly, so heat pumps are an efficient replacement for traditional electric storage water heaters. Electric thermal storage heaters use electricity to heat a large tank of water during off-peak hours, and store it so occupants can use it during peak draw times. Heat pump water heaters are significantly more energy efficient: they use 50 to 100 Watt-hours per gallon, while electric thermal storage heaters use 125 to 200.

From a utility perspective, both technologies have energy system benefits. In cold climates, heat pump water heaters reduce overall energy use by 30 to 60 percent. Electric thermal storage water heaters don’t save energy, but they do shift the peak (unless the occupants use more than their heater’s capacity). This helps reduce to need for additional capacity, and can make use of low cost off-peak resources like wind energy. However, accounting for standby losses from the larger tank, they can sometimes use more energy than standard heaters due to overheating. 

Electric thermal storage heaters are also more affordable because the user only has to pay for a new control (as opposed to a new water heater). If peaking isn’t a major concern, heat pump water heaters can save significant amounts of energy, but at a higher upfront cost to the consumer. And it can be hard for a homeowner to justify that investment, especially since most utility rebates cover the entire cost converting to an electric thermal storage control. 

This is reflected in the data. According to a current Department of Commerce-funded market assessment by Senior Research Engineer Ben Schoenbauer, seven Minnesota utilities offer rebates for heat pump water heaters, and eleven offer them for electric thermal storage. In addition to the rebate for the upfront cost of electric thermal storage, the utilities offer a reduced rate for electricity purchased off-peak. Statewide, only about fifteen customers have taken advantage of programs for heat pumps, while thousands have installed electric thermal storage. Those controls can help small outstate utilities, who have more electric customers than metro-area utilities. But could heat pumps provide enough peak reduction, coupled with their energy savings benefits, to replace electric thermal storage in some utility programs?

Beginning in April 2015, a new Department of Energy (DOE) conservation standard will require any electric storage water heater with a storage volume above 55 gallons to meet the level of efficiency currently achieved by heat pump water heaters. The DOE estimates that the 2015 standards will save 3.3 quads of energy and avoid 172.5 million metric tons of CO2 nation-wide, which is equivalent to taking 33.8 million cars off the road. But it presents a challenge to utility rebate programs based on 2010 standards, so a committee is developing a waiver process. The waivers would allow manufacturers to produce a limited number of electric water heaters with storage volumes greater than 55 gallons, but only for installation through a specific utility’s electric thermal storage program. Each waiver would last for one year, but manufacturers could apply for another in following years. But even if it’s adopted, this process won’t affect the conservation standard itself.

For Minnesota, these policy debates are occurring in a bit of a data vacuum. It’s challenging to verify the energy savings of any of these upgrades, because Minnesotans install water heaters in the basement. Modeling is often inaccurate because basements are poorly represented, and there’s very little field data from cold climates. Despite these constraints, water heating remains a large percentage of our state’s residential energy use. In an effort to provide more information to policy makers, CEE is compiling information about heat pump water heaters, and adapting findings to reflect Minnesota’s climate, water heating systems, and typical usage.

*This research is supported in part by a grant from the Minnesota Department of Commerce, Division of Energy Resources through the Conservation Applied Research and Development (CARD) program. And with co-funding by CEE in support of its nonprofit mission to advance research, knowledge dissemination, and program design in the field of energy efficiency.