This is how we can lower your power bill, by saving on water heating

05 April 2023

Energy transition Ways to save

Water heating is one of the biggest contributors to home energy bills, not helped by the fact that most hot water cylinders in New Zealand can be heated up at any time of day, including peak times when power prices are at their highest.

New Zealand desperately needs a generally available solution to hot water heating costs, both for the benefit of consumers through reduced electricity bills, as well as the environment given that more peak time energy usage means a greater reliance on fossil fuel generation. The other piece of the puzzle is to continue to allow the distribution networks to manage their demands efficiently and bring them along this learning journey.

That’s why we’ve been conducting an innovative trial to control the hot water cylinders of volunteer households, by only heating hot water during off-peak times when electricity rates are cheaper and carbon emissions from generation are typically lower.

The idea was to see how much we could reduce the cost of water heating, while at the same time ensuring that hot water is still readily available when it’s needed. After all, the solution needs to be practical and sustainable.

The great news is that the trial indicates we can reduce power bills by an average of 35 cents per day in participating households. That means average savings of about $128 annually.

Given that hot water heating can account for around 35% of the typical household’s electricity bills, this could make a big difference to those who struggle with power costs.

Importantly, no participating household reported any issues with the supply of hot water when it was needed.

By controlling when hot water cylinders heat up, we can make sure they’re more likely to use renewable energy, and cost less!

Here’s how it worked…

To find the right balance between saving customers money and ensuring hot water is still available, we split the participating households into two groups and controlled the flow of energy, by turning off the power to their hot water cylinders at different times.

Cohort one had their hot water controlled during the peak time periods of 7am-9am and 5pm-9pm.
Cohort two had their hot water controlled during the peak periods above, as well as the ‘shoulder’ rate period of 9pm-11pm.

Participating customers are all on Electric Kiwi’s MoveMaster plan, which is a time of use product designed to incentivise load-shifting by offering cheap off-peak rates and half price overnight, but with higher rates during the busy peak times.

The trial meant households were able to shift an average of 3.3kWh of peak time load to off-peak times EVERY DAY, meaning this power is instead used when rates are cheaper, without having to adjust how they use hot water.

In addition to shifting load to off-peak times, the trial saw households reduce their overall power consumption each day by an average of 1.1kWh. That’s broadly equivalent to the daily power usage of the average fridge-freezer.

Man in towel next to hot water cylinder

Hot water cylinders might just be the biggest, cheapest battery NZ has at our disposal to accelerate the transition to renewables.

That’s great – but what now?

Unless controlled, water cylinders will draw energy to reheat water soon after it’s been used. Therefore, households who use lots of hot water during the evening peak, such as for washing clothes, running the dishwasher and taking a bath or shower, will be especially hard hit by the peak time cost of water heating. For families, the cost of water heating could make up around a third of their overall power bills.

As we’ve shown, there’s a huge opportunity to save households money, while at the same time supporting the transition to more renewables by shifting this peak usage to other times. The best thing of all is that most households won’t even notice a difference.

This innovation is being led by power retailers, and we’re at the bleeding edge of it. Our long-term plan is to make this automation available to tens of thousands of current and future Electric Kiwi customers, but for now our trials continue and we will expand to other network areas to determine the broader impacts and challenges that we’re expecting.

We’re now negotiating with other networks and metering companies to increase the scale of this initiative, and will be in touch with eligible customers in the coming months. Our plan is to make this a commonly available solution for many more customers in future.

More about the trial

We launched the trial in October 2022 and began contacting customers in the Vector Network area who were already on our MoveMaster plan.

The trial was undertaken in partnership with Influx Energy Data who provide smart energy metering data solutions. They took care of the smart meter installations required to enable us to schedule the hot water control. Our own data science team ran the analytics on each participant’s energy usage both before and after we began controlling their water cylinders, to calculate the average savings and amount of usage shift to off-peak times.

The preliminary results are based on 14 participating households over 35 days of optimising their hot water energy consumption. The trial remains active.

It’s worth noting that, while we’ve shown how much can be saved by controlling hot water heating, customers may not see the same direct savings on their bills due to seasonal and other variations in their energy usage habits.

Can I get involved?

We're working to roll this out to more people as we continue to get local networks on board. For the latest, check out our dedicated page.

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