Hot Water Demand Flexibility for all Electricity Retailers

Project overview

Building on a successful six-month pilot involving major electricity retailers, the programme demonstrated the ability to significantly reduce peak hot water demand while maintaining customer comfort and choice. By shifting water heating away from peak periods, retailers can better manage wholesale electricity costs, create new customer value propositions, and contribute to a more resilient electricity system.

Innovation challenge or opportunity

This project addresses the challenge of how electricity networks can manage growing peak demand and increasing electrification without relying solely on traditional network reinforcement. As electric vehicle adoption, electrified heating, and distributed energy resources continue to expand, networks need more flexible and responsive ways to balance supply and demand while making better use of existing infrastructure.

The project unlocks residential hot water systems as a scalable demand-side flexibility resource, creating new opportunities to optimise network performance and customer outcomes. Using IoT-enabled controls and smart meter communications, hot water load can be intelligently shifted away from peak periods, reducing network constraints, improving system resilience, and delivering value for both retailers and customers. The initiative also lays the foundation for future flexibility markets and supports the evolution towards a Distribution System Operator (DSO) model, enabling a more coordinated, customer-centric, and future-ready electricity system.

Desired outcomes and customer benefits

Business outcomes include:

Reducing peak demand through intelligent hot water load management, improving utilisation of existing network infrastructure and delaying or avoiding traditional network reinforcement.
Providing electricity retailers with a scalable flexibility service that can reduce wholesale energy costs and support new customer offerings.
Improving network resilience and operational efficiency through targeted, real-time demand orchestration using IoT-enabled controls and smart meter communications.
Establishing the operational foundations for future flexibility markets and supporting the transition towards a Distribution System Operator (DSO) model.

Business outcomes include:

Customer benefits include:
Potential savings of up to $150 per year through retailer-managed hot water programmes where savings are passed through to customers.
Maintaining hot water comfort and convenience while reducing electricity costs.
A more reliable and resilient electricity network capable of supporting growing electrification and future energy technologies.
Greater customer choice through retailer-led flexibility products and pricing plans.

Business outcomes and customer benefits delivered

During the pilot, participating retailers were able to respond to market conditions, including periods of network constraints, by reducing load at peak times. This helped ease pressure on the network and avoid higher costs flowing through to customers. In addition, peak hot water demand was reduced by up to 75 percent in summer and 55 percent in winter, confirming that load can be shifted away from peak periods without impacting customer experience.

Counties Energy estimates that, where retailers pass on the benefit, customers could save up to $150 per year through managed hot water programmes.

Learnings for other lines companies

This service also implements a common framework and an operational dispatch hierarchy for flexible load that will be used by all retailers and future flexibility providers on the Counties Energy network. This will prioritise and coordinate dispatch grid and network emergencies, customer experience and market participation.

Next steps

Counties Energy is now inviting all electricity retailers to participate in this service and deliver new tangible savings to customers.