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Hacking hot water to save money

We’ve been figuring out how to turn your electric hot water cylinder into a smart device that can save you hundreds of dollars.

Hacking Hot Water Header

Hot water accounts for about 30% of household power bills and controlling the times it’s switched off and on can make a big difference when it’s time to pay that bill.

Your water cylinder is like an electric jug with great insulation, it uses an element to heat water to a certain temperature. When you wash the dishes or take a shower the hot water you use is replaced by cold, this triggers a thermostat, activates the element and heats more water which is then stored until you use it. Most cylinders are switched on all the time and heat more water whenever the temperature drops.

But your hot water cylinder doesn’t need to be switched on all the time. As soon as you finish your morning shower it will start heating the water again, not super useful if you’re about to head to work. 

Because the cost and availability of electricity varies throughout the day, it makes sense to control your water heating to use electricity when it's less expensive, and take advantage of your cylinders insulation to retain the heat in between. 

So well that other countries are replacing gas hot water with them. 

How we’re planning to help

Until now this sort of hot water control has only been used by network companies to reduce electricity demand at peak times using something called ripple control ¹ . This is usually connected to industrial heating and large appliances, like your hot water cylinder. Individual households haven’t been able to control their hot water without installing special equipment. 

Now there’s a way.

We’ve been working with metering companies like Influx to remotely manage your hot water cylinder alongside your network operator using new smart meters that are being installed nation-wide.

For the past six months, we’ve tested hot water controls with a small group of Octopus employees and customers, and we’re excited to share some of the results.

By collecting information about cylinder sizes and hot water usage patterns we’re learning how much control is required to save our customers money without running low on hot water. 

We’ve turned off their heating at the most expensive times of the day; four hours in the morning, and four hours in the evening. 

Switching off the hot water for 8 hours a day sounds pretty scary, and the last thing we want is for our customers to have cold showers! So, we’re happy to report that out of 25 participants we’ve only had one household report ‘slightly lukewarm water’ once. Their hot water system ‘isn’t the newest’, and they had problems with it before they started our control trial. 

We pushed the boat out further with a smaller group of participants, and turned their hot water cylinders off for 18 hours a day! The good news — they haven't noticed a difference in water temperature either.

Hot water control TOU chart

The purple in the chart shows the times we’ve shifted hot water heating for the people on the trial. The pink area shows the time hot water cylinders consumed power prior to the trial. You can see there is almost no consumption through the peak periods when you’re paying the most for electricity.

How much can you save?

Currently about 3 - 4 kWh per day is being shifted away from peak periods when pricing is often around 10c per kWh more expensive than cheaper times of day. 

This alone equates to over $100 savings for an average household, and much more if we extend the time the cylinder isn’t drawing power.

Heat smarter

This is just one way we can make the most of current technology to benefit consumers.

As new meters become widespread, there will be more benefits. Like on occasions when there are problems with the national grid, hot water cylinders and other domestic and industrial appliances that use a lot of power can be controlled to avert power outages with more accuracy and agility than the former ripple control system which is being phased out. 

We also think it would be great if we could switch off your cylinder for you to save power while you’re on holiday.

We want to put the control in your hands, and let you decide what level of savings you want. The more hours of control you can live with, the more savings you can make.

It’s part of our wider goal of ‘intelligent demand’. 

Energy systems are changing and as we move more and more towards renewably generated electricity like wind, solar and hydro,  we can continue using gas to manage variability which is both expensive and bad for the environment or we can start making our usage more intelligent, automating its usage to balance the grid. . 

We’re bringing technology to New Zealand that’s been trialled in the UK to allow us to remotely control other energy intensive devices, like EV charging and heat pumps. 

By combining these, our customers can have a significant amount of their energy ‘smartly controlled’, only using energy when they need it and saving money!

We’re keen to get more customers on this trial to help save, and figure out the ideal level of control, without cold showers! 

We’ll be rolling out the trial to eligible customers in coming months, but if you’re keen to know more please get in touch at 

¹ Ripple control is used by networks to reduce peak demand and manage network issues.

Published on 14th February 2023
David Charlton
David CharltonHead of New Energy Solutions

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