​RAP’s definition of beneficial electrification asserts that an electrified end use must satisfy at least one of the following conditions, without adversely affecting the other two:

  1. Saves consumers money over the long run;
  2. Enables better grid management; and
  3. Reduces negative environmental impacts.

Water heating accounts for almost 20 percent of residential energy bills—and, put simply, today it can take far less energy to heat a gallon of water with electricity than directly with fossil fuel. This paper, the third in RAP’s Electrification in the Public Interest series, explores best practices and considerations for making water heating beneficial.

This paper examines two technology options for electrification of water heating: electric resistance (ER) water heaters and air source heat pump (HP) water heaters. It finds that HP water heaters are already a lower-cost option than oil or propane models, and growing more cost-competitive with gas-fired models as well, especially when time-varying rates are available so customers can control their usage to save money. Because electric water heating load is also controllable by power-system operators, it can add much-needed flexibility to the grid; ER water heaters in particular can be used for fast-response control to provide ancillary services. And in most power system energy mixes (with the exception of those where generation is more than 50 percent from coal), a HP water heater will be more emissions efficient than its fossil-fueled alternative. The paper also examines strategies for achieving beneficial electrification of water heating, including improved standards for new construction, reform of state energy policies that discourage electrification, ensuring access for low-income customers, and financial incentives.