Comparing Electric Water Heaters and Batteries as Energy-Storage Resources for Energy Shifting and Frequency Regulation

Abstract

Recent technical, market, and policy developments in the electricity industry are increasing interest in and need for energy storage. We examine the potential for using the flexibility of an aggregation of tank electric water heaters as a source of virtual energy storage. Specifically, we examine the operational performance of and operating profit that is earned by a fleet of water heaters that provide energy shifting and frequency regulation. We contrast this performance and operating profit to that of a lithium-ion battery. We find that water heaters do not achieve the same level of performance or operating profit that a battery does. However, when accounting for the capital costs of the two technologies, water heaters are superior, insomuch as they have a better cost-to-profit ratio. We find that both water heaters and batteries earn significant operating profits from frequency regulation as opposed to energy shifting. Water heaters have a stronger bias towards frequency regulation, due to temporal constraints on load shifting. Relaxing these constraints improve water-heater performance slightly.