On April 6, Minister for Climate Change and Energy Chris Bowen announced a ‘bill busting’ election promise – to roll out a $2.3 billion program to cut home battery costs by 30 per cent and bring down power bills by up to $1100 a year for those with solar systems.

But, for the one in three households with rooftop solar, there is already a simple way to cut bills, says Ty Christopher, Director of the Energy Futures Network at the University of Wollongong. In fact, a costly lithium-ion battery is last on Ty’s tick list for homeowners switching to clean energy.

“For most residential households, between 30 and 50% of their total energy footprint is water heating,” he says.

“Before you look at a battery, look at heat-pump hot water – and run it during the day as a thermal battery. That's what hot-water systems are.”

7 Steps to a Clean Energy Home

“Step one, get solar on your home,” Ty says. “And get a decent-sized system, over 7.5 kilowatts, something with some gusto.

“Step two, replace your hot-water system with a heat-pump hot-water system.

“Step three, abandon off-peak tariffs.

“On your hot-water heat pump, all of them have a very simple timer – just set it to operate during the hours when your solar's working. It's very, very simple.

“Once you've done all of that, look at going all-electric.

“Then if you can afford it, look at an electric vehicle and charging it off your solar.

“The last on my list is a home battery. They're still expensive and the economics of them are still marginal at best.”

Using a hot-water tank as a thermal battery may cut 15 to 30 percent off a bill, depending on the size of your tank and solar system. Add in an energy-efficient, all-electric heat pump, as Ty did recently, and it could cut bills in half.

“My own direct experience doing exactly this 10 months ago at my own home: I installed a heat pump, abandoned traditional off-peak and now run the heat-pump hot water during the middle of the day off my solar. My hot water heating energy consumption has dropped by 75%. So I'm only using a quarter of the energy that I did before. And the energy that I am using is coming entirely from my solar.”

And no one in his family has had to have a cold shower.

Shop around for best deals

Local ‘poles and wires’ network operator Endeavour Energy has been a pioneer in recognising hot-water tanks as a storage solution, running a ‘solar soaking’ trial in Albion Park in 2021 and last year, on July 1, introducing new “solar soak” tariffs. A spokesperson describes it as Endeavour’s “most cost-effective distribution network tariff” ever offered to electricity retailers.

Basically, its 24,800 sq km network is free to use while the sun is strongest.

"Under the new tariffs,” the spokesperson says, “the use of the Endeavour Energy network is free between 10am and 2pm every day, meaning we do not charge electricity retailers for their residential and small business customers using our network during these hours.

“The aim of these tariffs is to encourage electricity retailers to pass these savings.”

This idea is that customers with solar will be incentivised to act and – crucially, to keep it fair – those without solar systems will also benefit.

Think you’re paying too much? For the best deal, Endeavour says to shop around at www.energymadeeasy.gov.au

“Energy Made Easy is a free and independent Australian Government service to help residential and small business customers navigate often complex electricity and gas retail markets and compare the offers from different energy companies.” 

Australia shines at rooftop solar

Due to the runaway success of rooftop solar, Australia can’t look overseas to see how storing energy in hot-water tanks has worked. 

“We’re a decade ahead of anywhere else, Ty says.

“There is no instruction manual – for what we already have today. Go to Europe, go to North America, and tell them that Australia has an energy grid that has 11 million homes and four million of those homes have solar and are generating and exporting energy. And the first response that I get is they look at you in disbelief and say, ‘No, you've got your numbers wrong. That can't be right.’

“And then you have to start explaining to them, ‘Oh hell yes, we are right.' And then their questions start flowing on how does that even work?”

Rooftop solar is tipped to grow even further. Endeavour’s spokesperson said, “By 2034, it’s projected that half of all homes will have solar systems, while one in three are expected to have a home battery.”

Electrify 2515 leads charge

Boldly going where no sunny country has gone before means the current Electrify 2515 Community Pilot is vital. The 500 homes in the pilot will generate real-world data to guide the nation’s energy transition.

“Hot-water systems are an excellent way to store solar energy,” says John Buchelin, the pilot’s operations manager.

"The midday solar window is the new off-peak. The more we heat our water during the day using cheap or free solar, the lower people's energy bills will be.”

"Anyone with an electric hot water system can install a timer on to make it heat during the day with the help of an electrician.”

Driven by 2515 locals and run by Rewiring Australia, the not-for-profit co-founded by Austinmer’s Dr Saul Griffith, the pilot provides subsidies for participants to upgrade to electric hot-water systems.

John says, “Through the data collected, we'll be able to calculate the exact savings households make on their power bills as a result.”

Good for you, good for the grid

Storing energy in hot-water tanks helps the grid too.

“Lots of people are talking about us having too much generation on bright sunny days and that causes problems with grid stability,” Ty says.

“We've got gigawatts of demand sitting there in everyone's hot-water tank. All we need to do is turn them on and, it probably won't fix the problem entirely, but by crikey it'll make a dent. You would easily halve the number of instances where you even need to think about switching off the solar.”

For homes with rooftop solar, Ty says cancelling off-peak tariffs and switching to free sunshine to heat their hot-water could be done at a grid level, using centralised control computers, in “a couple of weeks” at a “minuscule” cost.  

“It's not rocket surgery. I think there's an opportunity for the government to instruct AEMO [the Australian Energy Market Operator] to direct this.”

Do we need high-level reform?

No rules need to change for networks to implement solar soak tariffs, according to market rule maker the Australian Energy Market Commission (AEMC).

Asked about expanding ‘solar soaking’, AEMO said it was “highly supportive” of initiatives to enable greater flexibility in the energy system.

However, AEMO – which is co-owned by government and energy companies – put the onus on others, stating its role was primarily “to manage the grid and ensure its stability” and that it was up to “businesses to design services that meet customers’ needs and up to customers whether they wish to participate”. 

Ty describes AEMO’s approach to managing the abundant solar flowing into the grid as “archaic”.

“Their business statement really should be ‘AEMO: 20th century thinking for the 21st century grid.’ Their solution is to ‘just switch off the solar’. We don't have too much generation – we have not enough storage.

“There are multiple ways you can store electricity. Batteries are one, gravity is another and heat is a third. With all of our energy, there's no silver bullet solution, there’s only silver buckshot. We need to be pursuing all three.”

Why no one’s talking about ‘thermal batteries’

Ty says the idea of hot-water tanks as thermal batteries is not taking off due to vested interests.

“The problem is the business model of the big three – AGL, Origin and Energy Australia.”

These companies are known as gentailers – electricity retailers who also own the gas and coal generation assets.

Ty says, “So why is it ever going to be in their financial best interests to turn hot-water systems on during the middle of the day and heat all the water with abundant low-cost solar – that they don't own?

“At the moment, off-peak hot-water heating is literally keeping the coal fires burning.”

For this UOW scientist – who spent 38 years working with power systems, ending his industry career as Endeavour’s chief engineer – hot-water tanks as thermal batteries is a straightforward technical fix.

But with a first-term Labor government focused on big energy projects and a federal election campaign in which ‘renewables versus nuclear’ is being hotly debated, small, household-level changes have not been on anyone’s list of talking points.

“First of all, the gentailers don't want it spoken about because it's not in their interests,” Ty says. “The network companies don't want to pick a fight with the gentailers by making a big story about this. Most people who are in government and political and policy roles are not engineers, and they're certainly not power systems engineers. Most of them have economics, sociology, political science degrees.

“And this is, at the end of the day, a niche technical discussion on how grids operate.”

Read more in December's article Speaking to power and see the full responses from Endeavour Energy, AEMO and AEMC