A new housing development in suburban Minneapolis-St. Paul will use grid-interactive electric thermal water heaters to enable the Midwest’s first community energy storage project.

Country Joe Homes’ Legacy 2 development in Lakeville is building 79 homes over the next two years. Each home will have 80-gallon water heaters manufactured by Steffes Corp.

The Steffes 80-gallon electric thermal water heater.

The sophisticated water heaters will allow Great River Energy (GRE) and Dakota Electric Association — the cooperative providing electricity to the development — to use them as community storage capable of integrating the state’s growing wind and solar resources.

“The water heaters behave as a battery and absorb energy, mainly at night, but they can be turned on and off in a moment’s notice,” said Gary Connett, Great River Energy’s director of member services.

“The game-changer for us is this variable generation in our future and here today. Renewables and more photovoltaics means all of a sudden we need something more dynamic than the water heater of the past,” he said. “This is where this grid-interactive water heater has benefits.”

While the utility’s current water heater program offers customers two options to charge water heaters in return for better rates on their bills, the Legacy 2 development’s water heaters allow real-time charging and energy storage, Connett said.

Water heaters can represent as much as 40 percent of a household’s energy use. Being able to nimbly control water heaters will allow Great River Energy to offer sophisticated energy services to the Midcontinent Independent System Operator, or MISO, the regional grid operator.

John Diem, regional sales manager for Steffes, said his company’s only other similar installation in the country is at a 500-unit apartment complex in Hawaii. There the waters heaters are charged in part by the abundant solar energy available in the state, he said.

“Lakeville will be the only community storage fully deployed for now in the continental United States,” Diem said.

While battery technology is often offered as another solution to storing power from wind and solar, water heaters present a more robust and less expensive approach, Diem argues.

Steffes’ website points out that a Tesla battery costs more than $6,500 and provides 7 kilowatt hours (kWh) of storage. In contrast, a Steffes water heater offers 10 kWh of storage slightly more than $1,500.

Serving the MISO market

The water heaters can be set to take advantage of real-time energy prices. When the prices rise higher than a certain threshold the water heater can be turned off, Connett said.

If prices plummet during the day or night — perhaps from a surge in electricity from wind or solar — the heaters can store the energy. And the utility knows through sensors the temperature of water in the heaters.

“We can charge the tank if the temperature dips too low,” Connett said.

Electricity used for charging the water heaters can be changed “literally on a four- or five-second basis,” he said. Such voltage regulation can be helpful in the wholesale market operated by MISO through what’s called “ancillary services.”

The Steffes heaters also allow for voltage to them to be adjusted, the kind of control regional grid operators reward, Connett said.

Also, traditional power plants ramp up to meet increasing power demands on the grid, and then adjust when it declines. Such swings could be better managed with smart-grid technology applied to home heating.

“We can do it far faster than a power plant and with far more accuracy than a power plant,” Connett said.

Once built out, the load of the 79 homes in Lakeville will be more than 300 kilowatts (kW), a significant amount of energy, he said. MISO’s threshold for managing ancillary services from utilities starts at 200 kW, so Great River Energy could participate in providing that on/off capacity using just 50 water heaters.

As for homeowners, they will see a better rate on their electricity bill as well as future control of the water heater, Connett said. An app in the future would also allow a family headed for vacation to adjust their water heater, he added.

Steve Sauber, vice president of Country Joe Homes, said he has installed electric water heaters in developments for years. The company has a close and long-standing relationship with Dakota Electric, and was ready to take on grid-interactive water heaters and expose them to home buyers.

“When (home buyers) hear about what the electric water heaters can do, they’re not doing cartwheels but they do understand this is the leading edge of something new,” Sauber said.

That is also the goal for utilities — managing the grid without customers knowing there is any difference. As Connett points out, as long as the water runs hot customers aren’t really thinking about how variable generation is fueling their water heaters.

But the ability to manage them is an important tool in the future energy grid. They reduce carbon by allowing “more renewable energy and variable generation,” he said. “This is a new frontier for us and it’s rather exciting.”

Frank is an independent journalist and consultant based in St. Paul and a longtime contributor to Midwest Energy News. His articles have appeared in more than 50 publications, including Minnesota Monthly, Wired, the Los Angeles Times, the Minneapolis Star Tribune, Minnesota Technology, Finance & Commerce and others. Frank has also been a Humphrey policy fellow at the University of Minnesota, a Fulbright journalism teacher in Pakistan and Albania, and a program director of the World Press Institute at Macalester College. Frank covers the state of Minnesota.