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Octopus Labs: An update on the Hot Water Trial

Since July 2022 we have been running a Hot Water Control trial to understand how much a customer can save from unnecessary hot water heating, by shifting electricity usage away from Peak times of day when electricity is the most expensive and generally has a higher carbon impact.


Hot water accounts for about 30% of household power bills and most household hot water cylinders are switched on all the time. As soon as hot water is used, like when you do the dishes or take a shower, hot water is replaced by cold water and the thermostat is triggered to allow the element inside the cylinder to turn on and heat the water again, regardless of when you may next need it.

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

How does the trial work?

Customers have been invited, or requested, to opt into our trial based on the type of meter they have at their property. A customer can then choose the level of control that suits their household’s needs.

The higher the level of control, the higher the savings because we turn it off for longer and more regularly. Therefore as a result, completely avoiding Peak times for hot water heating.
We send the electricity meter a signal which turns off the power to the hot water cylinder for a set amount of time, based on the control level requested. Once the period has finished, the power is turned back on. We can send multiple signals per day, to avoid both the morning and evening Peak periods and prioritise heating during Off-peak and Night when the electricity is cheaper.

Our trial allows total flexibility for the customer. If they find the level of control is too high, or they have more people in the house for a weekend and therefore require more hot water, then they can simply ask us to reduce the level of control. There is no limit to the number of times a customer can adjust their level of control.

Is controlling hot water heating new?

Hot water control isn’t new. Most electricity meters in New Zealand allow the network company to remotely turn off hot water heating for short periods of time when there are high levels of demand and a network is becoming overloaded. This is called Ripple Control, and it helps a network to avoid power outages during times of high demand. The technology isn’t new, it’s been around since the 1950’s, and it is costly to keep maintaining. It is also a fairly blunt tool. It generally controls entire neighbourhoods at once, with limited ability to tailor to a household's specific hot water usage.

The new generation of smart meters allow control to be managed more smartly. We have been working with metering companies, Influx and Vector Metering to develop the ability to control meters individually, based on a customer’s preferences and household make up. With our trial, the network companies are able to still control during an emergency, but when they don’t need the control - which is the majority of the time - we can lower the cost of electricity every day with our control.

So, how has the trial gone?

We currently have 100 customers on the trial and have seen very promising results in regards to savings and shifting usage out of Peak times of day, when electricity is the most expensive and typically has a higher carbon intensity.

Hot Water Trial Update

Customers are saving up to $250 per year, with an average of $100 per year for most customers. The savings have been achieved based on the level of control we’ve had and it’s required next to no effort from the customer. We also make use of the existing meters a property has, so there are no set-up costs for the customer. 

Customers who use more hot water in the evening are saving the most. If you typically have a shower around 6-8 pm, then normally your hot water would heat back up between 6-9 pm during Peak time. Instead, this heating is happening now in the early hours of the morning. With our half-price nights, this effectively halves the cost of your hot water (assuming your cylinder is insulated enough so the water stays hot during the day - which most of them are)

We are seeing 2-6 kWh being shifted away from the Peak period every day into Night or Off-peak periods. This means almost half of a customer’s annual hot water usage is being shifted  - about 1300 kWh per year. 

Do customers get cold showers?

The majority of customers have not noticed a difference in the temperature of their hot water since going on the trial. To date, we have had one customer and one employee who have reported having cold water. The customer experienced a complete outage of their hot water heating, which is still being investigated, but appears to be a problem unrelated to our control. The employee was testing a very aggressive level of control, and as they went into winter, they did start running out of hot water so we reduced their level of control. 

Customers have the flexibility to shift between control levels and out of our 100 customers on trial, we have had 21 shift control levels showing that most are not noticing the difference in having us control.

What’s next for Hot Water Control?

There is still some work to support local metering companies that are rolling out the new generation smart meters that allow this kind of hot water control. Once we have more of these meters in the market, we can ensure all of our customers with hot water heating are saving money with Octopus.

It’s also our ambition to get smarter about controlling multiple devices in the home to save customers more money, and help support grid stability as we get closer to 100% renewable energy.

Published on 26th October 2023
Monique O'Malley
Monique O'MalleyHead of Marketing

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