Electric Company wants to hook up to my water heater
 

I just installed a new A.O. Smith heat pump water heater last week. Got the $800 rebate, so it came to about $250 out of my pocket. Then I received a letter saying they will give me $150 to hook up to my water heater. Is this a good idea? Here are the details....

Up to 600 residential electricity customers may participate in a smart water heater emerging technology demonstration project that enables better management of energy. A smart water heater is a water heater with a modular communication interface that will be able to receive and respond to demand response (DR) signals from utilities. By enabling the smart water heater to send and receive the utility's signals, the water heater can help support the grid. By changing the time when, and at what rate, it re-heats water the tank acts like a battery; controlling the re-heat rate has the same effect on the grid as storing or releasing energy from a battery. These small changes in when and how often water heaters run can be a valuable tool in grid management.

Renewable energy such as wind and solar is increasing on the electric grid. However, these intermittent generating resources create integration challenges for utilities. DR can be a cost effective tool to reduce customer's electricity demand for brief periods. It can also be used to help the grid absorb extra energy when needed. Using CTA 2045 communication technology, utilities are able to use the inherent energy storage capability of water heaters to smooth out the intermittent nature of renewable generation. Enabling this low cost communication port on every water heater in the Pacific Northwest could mitigate the cost of renewable integration and provide support to the electric grid.

​Participation Details
Participating in smart water heater demonstration will achieve the following:

Demonstrate that low-cost communication technologies can enable broad-scale DR
Facilitate better integration of low-carbon wind and solar power generation with the grid
Minimize the perceived impact of demand response (e.g., inconvenience, discomfort) to the residential customer
Provide data on the benefits of communicating water heaters to a reliable and low-cost grid
Provide feedback to product manufacturers on real-world applications
BPA’s goal for this demonstration project is to enlist a total of 600 households across all participating utilities. BPA seeks equal participation of residences with qualifying electric resistance water heaters (ERWH) and heat pump water heaters (HPWH). Eligibility requirements include:

Residential customers only
Single-family or multi-family residences
Primary residence that is continually occupied: no seasonal or vacation homes
Reasonable expectation of remaining at address for at least 12 months
Live in service territory of participating utility
Have an eligible water heater
AO Smith HPWH,
GE Geospring HPWH installed January 2014 or later, and
Specific AO Smith ERWH (tanks to be delivered for this project).
Strong radio reception of specific FM stations to be used in the project (Seattle/Tacoma: KJAQ 96.5, Portland: KINK 101.9, Eugene: KKNU 93.3, Wenatchee: KKRV 104.7 and KHNW 88.3)
Existing home Wi-Fi network that is continually available to the water heater, in order to:
Allows the utility-provided communication module to connect to the internet
Allow secure communication to the data collection server

I'd take the $150. The main sticky point that I read was the "It can also be used to help the grid absorb extra energy when needed." ..which means it will heat beyond the set temperature causing slightly higher standby losses temporarily and potentially use the heating element instead of the heat pump to do it, which could come at a slight cost to you.
I assume they wouldn't do this maliciously or even that often, even if it were to cost more over time I think the $150 would way more than offset this.

In my neighborhood we have an air conditioner switch that allows the utility company to temporarily shut off air conditioners in a rolling fashion to cut demand, usually 30 minutes at a time, but up to an hour I think in the contract and they can do it for up to 10 days in the summer. The fun thing is I've called the hotline for the program on almost every single day where we were forecasted to have over 90 degree weather and I have yet to have a control day. ..and my eGauge over the past three summers has shown zero air conditioner compressor cycling, which would be obvious because my air conditioner runs a single solid cycle during hot summer days. I figured that the utility company would make more use of the program to cut back on more expensive power purchases but apparently they are only really using it to prevent blackouts.
They chop about a cent off per kwh during the summer for being a part of the program.

You might be able to get savings from heating during off-peak hours, but generally this is already done through some sort of variable tarriff system, common in EU and AUS but not so much in the USA.

EDIT: I re-read it and it looks like this is whats happening, they want to give your water heater on-off signals so it runs when there is excess energy available from solar/wind. I would do it, free money. I would ask if the customer could set a 'preferred hot' period for when you usually take showers, so its not cold.

I'd pass. Security is my main reasoning. You will be allowing a government piece of equipment on your wifi network. Can you, without a shadow of a doubt, trust that they wont use their equipment to monitor anything else? Can you, without a shadow of a doubt, trust that someone cannot hack into that device and use it nefariously to monitor you?

While a good portion of your paranoia is valid here, I think you're over-doing it a little.

I do recommend you setup a secondary wifi or ethernet network for any devices like this, because they do have the capability to snoop your regular traffic if they were compromised.

Ideally this would be a one-way only device, where it just recieves demand response info and acts accordingly. I can't understand why they would want positive record of its actual operation, they should just assume it is running as expected, and if it's not, you're going to know because it won't be making hot water. In reality it could be anything, so.

*EDIT*: I guess they would want to know exactly how much energy they could sink, so it would be advantageous to know if the device is requested to be running, but is not, because it is not needed.

Thanks for the comments....Would I get a second router, or connect their equipment up to the guest account on my original router?

A lot of routers can broadcast two SSIDs, you could click around in your router's firmware web-page to see if it has the capability, a lot of routers you can also flash with custom firmware to do this, but that may be a bit too much effort for the value.

Honestly you are probably OK these days; *most* services are wrapping sensitive data, or just all data, with encryption these days. Https is good enough as long as you're ok with the government being able to crack everything open.

And since late March of 2017 your ISP is already scooping every bit of your unencrypted traffic, and all of the metadata from your encrypted traffic anyways, thanks congress. So whatever, no point in trying to secure it until that gets repealed.

Just understand that for default WPA2 encryption everyone on the network is using the same encryption key, so anyone with access can view all otherwise open traffic on that network, and potentially mount open air attacks as well.

I'd do it. The caveat to that is that years ago I adopted allowing the utility to demand control my A/C unit, for which they are still rewarding me $9/mo between April and October. In retrospect, I should have jumped on that project earlier.

Setting up a side network using old network gear would be 100% doable. That traffic could ride along with my weather webcams. They can snoop the weather webcam traffic all they want.

I have only one reservation, and it is this:

They give you $150, and then attach this device to your water heater. How long does it stay there?

Do you get any kind of a break on your utility bill?

When I installed my water heater I also put on a timer, which while not doing the utility any favors, does give me a measure of control of when the water heater is putting a load on the system. It's for my good, not theirs.

I think the smart grid is a good idea, but the one-time payment sounds a little light to me if the device might be there for years.

Another problem with this scenario is that it *could* give the grid operator excessive control over grid demand and be used to manipulate energy markets like in CA energy crisis.

And while its purpose is ostensibly to sink solar/wind energy, they could be doing the opposite to drive the profits from solar and wind down.

It's always the possibilities that I'm concerned about.

Me not being a very knowledgeable IT guy, it is nice to find out that there are good ways to deal with potential security/privacy risks.

I second the question on the duration of the device remaining. Also, is there anything about this device that might void your WH warranty? Any fine print about if this device malfunctions and causes your WH to burn out pre-maturely the utility is or is not liable?

Before joining be sure to read the small sprint as you may be required to stay on the program once joined.

Some more details of the program......

The device you receive will allow PSE to network with your smart water heater, and test its ability to work with demand response (DR). DR
is a process in which electricity usage can be automatically adjusted by your utility, typically reducing electricity use or shifting electricity use
to other times in the day. Many utilities across the country use DR technology to reduce strain on the grid. Typically DR technology is used
on very hot or cold days when the electric load is high. PSE and other regional utilities are offering this pilot program to learn how to manage
the grid as power availability goes up and down throughout the day from renewable resources like wind and solar.
This pilot effort will moderate your smart water heater’s electricity usage by temporarily adjusting its reheat settings, automatically. While your
smart water heater is experiencing a DR event, it still has the ability to control when and at what rate it heats your water. The smart water
heater will work to make sure you always have hot water in the tank. As part of this pilot, we’re exploring options for using this technology to
improve grid reliability while reducing unnecessary energy usage.
While utility grid operation is complicated, the technology is not. Simply connect the Wi-Fi/radio device and continue to use your water
heater as usual. Ideally, you will never notice a change in your hot water. If you do experience a change, or if you expect higher than normal
hot water usage such as when you have house guests, there’s an override command. At any time, participants will have the ability to
implement a 24-hour override of the DR signal.
Required steps & available incentives:
Step 1: Complete program application (see below)
Step 2: Upon approval, install and register communication device.
Installation is easy and can be done in less
than 15 minutes.
• Once installation and registration is confirmed,
we will pay you $50.
Step 3: Complete the 12-month pilot program by leaving your
device installed and active.
• Once the 12-month period ends, we will pay
you $100.
You may leave the pilot program at any time, but will
not receive the additional $100 if you leave before the
12-month period has been completed.
• Existing home Wi-Fi network that is continually available
• Allows the utility-provided communication module to connect
to the internet
• Allow secure communication to the data collection server
• Primary residence that is continually occupied (no seasonal or
vacation homes)
• Commitment that you will remain at your current address for at
least 12 months
• Eligible water heater*
*This qualification has been pre-verified for your home to the best of our ability. We will reconfirm eligibility once your application has been
submitted. See page 2 for full list of Terms and Conditions.

Terms and conditions here.....
HOMEOWNER ELIGIBILITY: The Property must have PSE electric service.
Participant will maintain Wi-Fi service so PSE may collect data from Participant’s water
heater. Participant must expect to live at the Property full time and have no plans of
moving or changing residency. Participant is enrolling in the Pilot on a voluntary basis.
REMOTE SIGNALING: Participant understands that PSE will remotely inform
Participant’s water heater to adjust when the tank reheats some of Participant’s
cold water. At times, this process reduces the total volume of hot water available.
This adjustment will occur without any manual intervention by Participant. At any
time, Participant may override PSE control events per the instructions set forth in the
Pilot documentation.
INCENTIVE PAYMENTS: PSE will provide incentives of (i) $50 upon enrollment and
successful installation of the two communication devices, and (ii) $100 upon full
completion of the Pilot, anticipated to be about a year after installation of the devices.
Please allow four to six weeks to receive incentive payments.
TAX LIABILITY: Participant is responsible for any tax liability which may be incurred by
the Participant as a result of participation in the Pilot or receipt of an incentive.
PARTICIPANT RESPONSIBILITIES: Participant assumes the risk of any loss or
damage(s) in connection with installation of the water heater, this Enrollment Agreement
or the Pilot. Participant is solely responsible for any service or repair to Participant’s
water heater, and the water heater’s installation, operation, use or maintenance. PSE
and its representatives and partners make no representation, regarding the design,
sizing, installation, construction, reliability, functionality, efficiency, performance,
operation, maintenance or use of any water heater, equipment or systems analyzed.
ENDORSEMENT: PSE does not endorse any particular manufacturer, contractor or
product. PSE is not performing or supervising any work. PSE is limited in its offerings
at this time to manufacturers or products that Bonneville Power Administration (BPA)
has approved.
SAFETY AND BUILDING CODES: Participant agrees to ensure compliance
with federal, state and local building and environmental codes for the installation
of the product.
PROPERTY RIGHTS: Participant must have proper authority to install the measure(s)
on the designated Property, both physical address and equipment.
INFORMATION COLLECTED: Participant agrees that PSE may make reasonable use
of any information PSE collects during the Pilot, including for administration of the Pilot,
provision of customer support, verification of Participant incentives, and evaluation of
the energy impact of the Pilot. Collected information may include (but is not limited
to) Participant’s name, email address, service address, PSE account number, general
energy usage data, Participant survey responses, runtime data, set-points, and
participation statistics. Participant gives PSE and its representatives express permission
to contact Participant to collect this information. If PSE cannot collect the required
information, Participant may not be able to participate in the Pilot.
INFORMATION RELEASE: Participant agrees that PSE may share collected information
in reports or other documentation submitted to the Washington Utilities & Transportation
Commission, Bonneville Power Administration, or other state or regional agencies
as necessary to meet PSE’s Pilot responsibilities. PSE will share data specific to
Participant’s household with a separate identifier that will not reveal customers personal
information. PSE will not share any personally identifiable information with third parties
unless required by law and will comply with PSE’s privacy policy located at pse.com/
privacypolicy. Participant agrees to release and hold harmless PSE, its agents and Pilot
partners from any and all losses, liabilities, damages, claims, suits, actions, judgments,
assessments, costs and expenses, including but not limited to attorney’s fees, arising
out of this Enrollment Agreement or Participant’s participation in the Pilot. PSE, AND
ITS AGENTS AND PILOT PARTNERS’ LIABILITY UNDER THIS ENROLLMENT
AGREEMENT AND PILOT IS LIMITED TO THE AMOUNT OF ANY INCENTIVE
OWED FOR PARTICIPANT’S PARTICIPATION IN THE PILOT AND IN NO EVENT
WILL PSE, ITS AGENTS OR PILOT PARTNERS BE LIABLE TO PARTICIPANT OR
ANY THIRD PARTY FOR ANY OTHER DAMAGES, WHETHER CHARACTERIZED
AS GENERAL, SPECIAL, DIRECT, INDIRECT, PUNITIVE, CONSEQUENTIAL OR
OTHERWISE OR FOR ANY FAILURE OF PERFORMANCE RELATED HERETO.
TERMINATION: PSE reserves the right to revise or terminate this Pilot at any time.
PSE may terminate Participant’s enrollment if Participant fails to meet their obligations
under this Enrollment Agreement. Determination of eligibility for this Pilot and any of its
incentives rests solely with PSE. Not all applicants will qualify for the Pilot. Participant
has the right to terminate the Pilot at any time; however, this will prevent remaining
incentive payments being paid to Participant.
ADDITIONAL INFORMATION: This Enrollment Agreement shall be governed by the
laws of the State of Washington. This Enrollment Agreement constitutes the entire
agreement between PSE and Participant with respect to the Pilot and supersedes
all prior and contemporaneous understandings, agreements, representations and
warranties, both written and oral.

I went ahead and installed the device from the electric company. What I have observed is the following:

The first couple of weeks at around 4 to 5pm the water heater heat pump comes on and builds some extra heat in the tank. Then shuts off around 5pm and stays off until a little after 8pm. There is an indicator light that shows it is being controlled by the power company at the peak (I would assume) times when they want to control the electricity usage.

The water temperature coming out of the tank is definitely hotter as experienced when I took a shower at the time it is being controlled.

It looks like they are tweaking their program because I haven't heard the heat pump coming on and building extra heat now for the last few weeks during the peak times. Nor do I see the control light being activated.