New analysis of electric water heaters shows need for cleaner energy mix

New analysis shows utilities need to clean up their energy mix in order to make electric water heaters environmentally beneficial.

  • As the Midwest continues to move towards more renewable energy, electric water heaters are increasingly thought of as a cleaner alternative to natural gas and propane water heaters
  • However, analysis filed in Great River Energy’s resource plan shows that their current and future energy mix isn’t quite clean enough to make electric water heating a net benefit in terms of carbon emissions compared to other fuel sources
  • Utilities need to add more clean energy or offer better green pricing programs to ensure that electrification of water heaters actually reduces emissions and drives investments in clean energy

On September 8, 2017, Fresh Energy and our partners filed comments in Great River Energy’s (GRE) Integrated Resource Plan before the Public Utilities Commission. Among other issues, the comments focused on GRE’s electric water heater program and environmentally beneficial electrification.

As a generation and transmission utility in Minnesota, GRE regularly files plans with the Public Utilities Commission detailing what mix of resources the utility will use to meet customer demand over the next 15 years. This incorporates existing and new resources, a mix of power plants, energy efficiency and load management efforts, and anticipated customer energy use to create a holistic picture of the utility’s system now and in the future.

In its current plan before the Commission, GRE highlights its electric thermal storage water heater program as an effective load management tool that helps shift customer energy use away from expensive peak times during the day to less expensive times during the night. This program produces tangible benefits to the utility system, saving the utility and its customers money. Shifting customer energy use to overnight hours also drives long-term wind development in the Midwest because wind energy generation is highest during the night. Finally, GRE’s program offers customers an upfront rebate for the water heater and a discounted rate to make electric water heaters cost-competitive with other fuel sources, in exchange for the ability to control when your water is heated (though as a customer you’ll still always have hot water).

GRE also describes its electric water heater program as an example of the utility’s efforts on environmentally beneficial electrification. We have posted about our support for GRE’s efforts to electrify the economy and the benefits of powering our homes, buildings, and transportation on clean electricity. However, GRE’s current and projected mix of generation resources does not make electrifying water heating for its customers environmentally beneficial compared to other fuel sources.

Comparing the carbon intensity of GRE’s current and projected resource mix with natural gas and propane water heaters shows that electrifying residential water heaters in the utility’s service territory leads to higher carbon emissions in terms of pounds per unit of energy used.

In this analysis, electric water heater emissions output can be no higher than the least efficient fossil fuel water heater (192 and 228 lbs of CO
2 per MMBtu for natural gas and propane water heaters, respectively) which equates to an electric emissions range between 609-622 lbs/MWh and 723-739 lbs/MWh. In contrast, GRE’s 2016 average annual emissions rate was 1,607 lbs/MWh.To make its electric water heater program truly environmentally beneficial, GRE needs to significantly decarbonize its electric system or pair its program with renewable pricing options that tie customer energy use with renewable generation.

GRE will file updates to its plan based on recommendations from stakeholders in early November 2017.

*An update to the Sept. 8 filing with a corrected MISO emissions rate (not included in this blog) can be found here.

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