Contractors have been asking us about a requirement for the TECH Clean California (TECH) heat pump water heater (HPWH) incentive program. TECH HPWH incentives require participating contractors to work with customers to enroll them in a demand response (DR) program to access the incentive–why is that?
To offer HPWH incentives, TECH accessed the California Public Utility Commission’s Self-Generation Incentive Program (SGIP) funding. SGIP offers rebates for residential energy storage technology, including battery storage systems. TECH was able to access SGIP funding because HPWHs fit this requirement–water heaters make great batteries! HPWHs can effectively store energy as heat in water when electricity supply is high and relatively inexpensive. Stored hot water can then be used later to avoid heating water during expensive peak electricity rate periods. Solar energy systems’ overproduction of electricity during the day can also be addressed with water heaters’ thermal storage capability.
At the household level, HPWHs can store and shift just small levels of demand on the grid. Demand response (DR) programs enable us to harness the full potential of HPWHs. DR programs are temporary demand reductions to customer energy usage coinciding with peak energy use hours or events. Customers benefit from reduced energy bills by choosing to participate in DR programs, and some programs even provide financial rewards. DR programs coordinate and aggregate customers’ demand reduction to enable grid operators to respond reliably to peak energy use events. When aggregated, HPWHs are more cost-effective at storing energy than lithium-ion batteries.
HPWHs will be a valuable short-term, flexible energy storage resource in California’s clean energy future. But to unleash their full potential, California needs its frontline of contractors to promote and install HPWHs and DR program participation to customers.
