Electric hot water could tame the solar duck, boost renewables and save billions

Switching off-peak electric hot water to the middle of the day, instead of the middle of the night, could help tame the solar duck while also slashing gas emissions and avoiding the curtailment of thousands of gigawatt-hours worth of cheap renewables, a new study has found.

The research from The Australia Institute and Buildings Alive finds that re-configuring Australia’s off-peak hot water systems to coincide with peak daytime solar production could provide around 4,000GWh of flexible demand a year, almost the exact current level of renewable curtailment.

The report says close to three million Australian homes continue to use off-peak electric systems to heat their water, as part of a decades-old coordinated approach originally rolled out to soak up excess night-time supply of coal fired electricity.

These days, the problem of excess electrons has switched to the middle of the day, when Australia’s millions of solar rooftops can flood the grid with ultra-cheap power, threatening grid stability and contributing to the need to curtail the supply of large-scale wind and solar.

The report finds “no technological or economic reason” these same off-peak hot water systems could not be realigned to solve the grid’s daytime, duck-shaped problem – with their operation managed actively by an efficient energy regulator.

“This is the low hanging fruit of the energy transition,” said Dr Craig Roussac, chief executive officer at Buildings Alive.

“There are significant gains to be made from this one relatively simple and cost-effective intervention in our energy market.

“There are so many untapped and cost-effective technologies that can shift electrical loads to support the clean energy transition and domestic hot water is one of the most obvious.

“State and federal governments across Australia should harness this opportunity now, so that future pressures on the grid can be eased and Australians can get access to abundant, clean, and cheaper energy in their homes.”

The report’s findings are backed by research from the Institute for Sustainable Futures at the University of Technology Sydney which models the impacts of switching off-peak hot water to the middle of the day.

The ISF found that, under its most conservative scenario, off-peak hot water systems could have provided around 4,015 GWh of flexible demand in 2020. Meanwhile, separate data shows that 3,959GWh of renewable electricity was curtailed on the NEM in the financial year 2023–24.

“This is the definition of a win-win opportunity, and this paper considers the size of that opportunity,” the report says.

“This 4,000 GWh of renewable generation is also the equivalent of around 40% of the annual output of all gas-fired generators in the National Electricity Market (NEM), and allowing it to flow into the grid rather than wasted would also reduce the need for further investment in gas generation,” it says.

Looking further into the future, the ISF models the potential impact of refining policy and further uptake of electric hot water systems out to 2050 and finds daytime off-peak hot water can be an efficient way to continue to match demand and supply across the NEM.

“Their research estimates that by 2040, off-peak electric hot water could provide around 50GWh a day, or 18,300 GWh a year, of flexible demand and storage to help stabilise the grid,” the report says.

“The higher amount of renewable generation that this would permit could save up to $6 billion in household electricity and energy costs, including expensive gas-fired hot-water.”