Policy Brief

Demand Flexibility of Water Heaters

August 9, 2023

Water heaters store heat, which makes it possible to shift their electric demand without affecting consumer comfort. This demand flexibility can be a key grid resource to reduce peak demand, lower electricity costs, improve power reliability, and enable better use of intermittent renewable power. But effective use of electric water heaters for demand flexibility requires that they be manufactured with the necessary controls. This brief explains what demand flexibility is, how water heaters can accomplish it, and why state or federal legislation is needed to make this capability universal. It also explains why such laws do not affect consumer privacy or mandate any changes to water heater use. And it finds that demand flexibility capability in new water heaters, if fully utilized nationwide, could provide more electric capacity than 40 large power plants.

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