Electric Thermal Storage vs. Heat Pump Water Heaters

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.

Related posts:

ACEEE Hot Water Forum 
Fall 2013 Research Update 
French Perspective: Thermal Regulation for New Residential Buildings 

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Comment by Curt Kinder on November 12, 2013 at 9:20pm

I don't see why an HPWH could not also shift demand to off peak periods. That feature needn't be unique to storage electric resistance tank heaters

Comment by Bret Curry on November 12, 2013 at 11:39am

Nice story. I personally own a HPWH that's tied into the DHW feature on my geothermal HVAC system. The HPWH is inside the conditioned air-space (laundry room) and purrs along at 40-50 kWh (4$-$5) monthly. Yawn... The dwelling is a very tight .10, (Yes I have some mechanical ventilation) insulated/encapsulated with expanding foam insulation, NFRC/Energy Star windows for south/central zone. ES appliances and more. Oh yea, the RH and dew point are equally as boring...and quite comfortable I might add.  I look at it this way...I'm a good steward of kHw with the HPWH. Not to mention my electric co-op does not find it necessary to offer a any demand response gadgets. Also, the HPWH mitigates/manages the RH & dew point temp inside the dwelling. Yea, I give up "some" heat in the winter. But BTU's from a top-of-the-line geothermal unit are far more efficient (and affordable)  than other less efficient fuel sources. I did locate the HPWH right next to the washer/dryer so it could gobble up BTU's from those units and ditch the latent heat by-product down the washer drain.  Keep up the fine work everyone. Over and out.

Comment by Kurt Albershardt on November 12, 2013 at 10:47am

An often-overlooked point:  Heat pump water heaters remove heat from the space in which they are installed.  The warmer that space, the more efficiently they operate.  In warm climates, this is a welcome thing almost all year long.  In cold months at northern latitudes, they create very cold basements or utility rooms while operating at marginal efficiencies.

Comment by William Turner on November 12, 2013 at 9:36am

Heat pump water heaters installed in unfinished basements produce hot water efficiently and remove dampness during humid months when the dew point outside is above 55 degrees. If there are 3-4 people taking showers and using normal amounts of hot water the owner can likely shut off the dehumidifier.

Comment by Carl Simpson on November 12, 2013 at 9:35am

The National Renewable Energy Lab. published a 144 page document reviewing Heat Pump water heaters vs. Solar Thermal systems using evacuated tubes.  The heat pump technology was a good choice in the SE US but the solar thermal choice was the best choice for the rest of the country even when going against Natural Gas.  Please email me if you can't find the NREL study and I will send you a copy.  carl@renewableenergynwllc.com  Have a great solar day!

Comment by William Turner on November 12, 2013 at 9:33am

Comment by tedkidd on November 12, 2013 at 9:26am
"Despite these constraints, water heating remains a large percentage of our state’s residential energy use. "

Not sure what to make of this. Is it implying large opportunity? Vague statements without numbers or conclusions make essays like this feel flat.
Comment by Christopher Morin on November 12, 2013 at 9:21am
The initial investment for a homeowner, particularly when trying to replace an operating water heater, can be a tough sell. In MA & RI, Utilities are offering a $750 Rebate to replace an Electric Water Heater with a Heat Pump. There are several installation requirments, to ensure energy savings based on a DOE study completed in 2010. Energy Factor of 2.4+ and 750 cubic feet of space are required...also, if the surrounding temperature falls below 45F, most of the Heat Pump Water Heaters available domestically will lock out and operate as straight electric. Proper installation is required if you want to reduce peak demand!!!
Comment by Bob Blanchette on November 11, 2013 at 10:15pm

Demand pricing for power will become more widespread as more smartmeters are implemented. It's already happening in Oklahoma:

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