Shifted Energy CEO, Olin Lagon (R) & Operations Director, Nicole Brodie (L)

Sun dance

Text Will Caron
Art Winfred Cameron

Hawaiʻi hopes to become 100 percent reliant on renewable sources of energy (renewables) by 2045. Along the path toward this goal, many hurdles will have to be cleared and many problems solved. Leading the charge, through the development of non-traditional, innovative solutions to these problems, is Hawaiʻi's growing technology community—including startups like Shifted Energy, which seeks to solve a fundamental problem with integrating renewables using a common household appliance.

“We're never going to integrate renewables into the grid at scale unless we can figure out a way to store that energy,” says Olin Lagon, a self-proclaimed “hardcore geek” gone hardcore energy advocate and service provider, and Shifted Energy's founder. “Renewables are often generated when the grid doesn't have a high demand for them: wind at night, for example, or during the middle of the day when we have way too much photovoltaic (PV) energy. If we don't use that energy, we lose it—or we have to store it.”

But storing energy in, say, a traditional battery or in a potential-energy storage device, is cost-prohibitive at scale, requiring the installation of additional hardware with limited lifespans that come with potential safety hazards. On top of that, the size of our current grids, and the amount of energy we collectively demand, dwarfs the capacity of our current battery capital. Even if you could unleash the stored energy in every battery ever made in all of human history, you'd only be able to power the U.S. grid-system for something like 7–10 minutes. And then it would all be gone.

But what if we could store excess renewables from our PV and wind systems using pre-existing infrastructure already connected to our grid, and then tap those renewables during peak times? Lagon may have found a novel solution that does just that, and it does it using typical electric-resistance water heaters.

Lagon founded Shifted Energy in 2014 and began working with the state's energy utility, Hawaiian Electric Industries and its main subsidiary, Hawaiian Electric Company (HECO), to install two-way, smart-grid meters to increase efficiency in home electricity use.

“We accumulated this massive wealth of knowledge about how to create energy solutions using technology and how to implement them statewide, at scale, in communities that are currently underserved,” says Lagon. “The logical extension of that earlier project was to take electric water heaters and see if we could get them to function like a battery to store renewables. It's potentially the cheapest form of storage there is—it would have been silly for us not to try.”

How It Works

Every day people need hot water to shower, do laundry and wash dishes. Groundwater is heated up, either using gas, solar power or electricity. The water heater is the single largest energy haul in a typical home, the average tank using around 10 kilowatt hours (kWh) of energy to heat its water per day.

Using a small, easy-to-install controller that has multiple temperature sensors, Lagon and his employees can see exactly how hot the water is in a given electric tank at a given time. In concert, Shifted Energy can also receive information from HECO about the state of renewable energy production along the grid in near-real time.

When excess renewables become available, like at night or in the middle of the day, Shifted Energy turns the heaters on. Rather than extra renewables going to waste (known in the industry as curtailment) or being stored in expensive chemical batteries, they’re used up, and energy in the grid is saved for other needs.

The Shifted tanks are well-insulated, and the 10 kWh of renewable energy used to heat the water is effectively stored there until it is needed, with a relatively minor net loss through heat transfer, reducing the amount of renewables wasted during peak generation times. In other words, the heater functions, in essence, like a battery.

“The tanks consume the renewables as they're created, so we can create instant demand for electricity and save energy in the grid for other uses,” Lagon explains. “If we know what the temperature of the tank is, we can equate that to a 'state-of-charge.' So if the tank is at 110 degrees Fahrenheit (ºF) at the top (hot enough for showers) but 80ºF on the bottom, it might be—in battery terms—60 percent charged. Even though you're not fully charged, you probably don't need to be for us to still give you your hot water.”

When an electron is fed into the grid, it travels through the whole circuit before returning to its substation. Everyone in the community is connected to the grid so, if you have PV on your roof, you're feeding extra electrons into the grid that can potentially be used to power your neighbors’ homes. The benefit to the grid is that, instead of the power company taking that energy and putting it in a traditional battery and then draining it out later, the business or the homeowner actually uses that renewable energy as it’s being created to heat water.

“Electricity travels at the speed of light, so it's pretty hard to tell it to hold up and wait in traditional storage,” Lagon chuckles.

In the United States, the standard electric frequency is set at 60 hertz (Hz)—that means the electricity in the grid oscillates at 60 times per second. American electronic devices are built to match that 60 Hz frequency, but additional electrons can push the grid frequency up to 62–3 Hz, which is enough to damage electronics. Conversely, a drop in electrons can damage motors. HECO uses controls to keep the grid electrons dancing back and forth, just over and under, keeping the frequency as close to 60 Hz as possible by either adding or removing load from the grid. Electric water heaters can help with managing the frequency of the grid: If there's a need to add load, Shifted Energy can turn on heaters to artificially generate demand and balance the frequency, or visa versa.

“It takes us between 4–10 seconds to get a signal, react to the situation on the grid and send a signal back to the heaters over the Internet,” says Lagon. “There's some latency, but it's fast enough to do the job. Fine tuning the demand to match the load increases the efficiency of the whole grid system.”

Because the startup doesn't have to install any hardware, except for the small controller, Shifted Energy's water heater “batteries” are orders of magnitudes cheaper to create and safer than chemical storage devices which degrade slightly after each subsequent use. By contrast, water heaters are rated for at least five years of use and can be heated every day without any inherent negative effect on the device.

The trick is making sure that customers still get hot water during the times when there isn't excess renewable energy available. This is where Lagon's tech expertise comes into play: he's designing learning algorithms that allow them to “charge” these batteries intelligently. These algorithms figure out when customers tend to need their energy and coordinate with a utility to make use of peak renewable production times. If the demand still cannot be met using only excess renewables, only then will the heaters tap into the grid. A heater might only be 90 percent charged through renewables, but the overall net effect is still better than it would have been otherwise.

“If we have a thousand heaters, we can turn off a fraction of them at any given time and begin to take in excess energy,” says Lagon. “If we want to get big enough to where we're taking in all the excess renewables that are generated, we just have to connect more and more controllers to these electric heaters. Then we can do our dance through the grid, supplying or collecting; shifting the energy around the grid. That's where the name Shifted Energy comes from.”

Making Water Heaters Sexy

“My favorite part of this is that it's one of the few grid services where the underserved can participate,” says Lagon. “Going full solar is great, but only upper income people can afford the initial cost to do that. At least half the state can't participate in renewable energy because they rent or they're not in a sun zone or maybe it's an apartment or a townhouse. But with our system, we can get those folks engaged in renewables. All they need is an electric water heater.”

Shifted Energy has just over 600 controllers installed as of June 2016, the vast majority of which are in rental properties.

“Now that we have a fairly significant fleet of these controllers, we're going to pause expansion and focus on getting really good at operating these things; to the point where we are as close to battery efficient as we can possibly be while servicing the resident so well that they don't even remember that we exist,” says Lagon. “Then we will start moving into higher value-added services.”

For example, if Lagon's algorithms notice that every Friday, Saturday and Sunday, there's no hot water being used at a house—maybe the resident is in the Honolulu Fire Department and spends weekends at the firehouse—Shifted Energy can shut off the tank. Maybe there's a mobile app that allows residents to remotely put their tanks into “vacation mode,” automatically shutting them off until the specific time at which the resident comes home. Another idea Lagon has is to create a leak detection service that would notify the customer as soon as a leak in the tank is detected, potentially preventing hundreds of dollars in water damage.

“Not only will we try to save you money and heat your water with renewables, we'll also protect you against water damage from a leak in your tank,” Lagon says. “Or imagine if your elderly mom lives at home by herself and we know that she takes a shower at 7 a.m. every morning. We could create an alert where, if we don't see any water drawn by 10 a.m., we'll text you so you can go over and check on her.

“You can only get scale if people are enchanted with your product. And we're not going to enchant them just by heating their tank with renewables,” he continues. “But nobody gets their water heater and thinks of it as security for their mom.”

Similarly, most people don’t think of their water heaters as potential emergency resources. But for a lot of people in Hawaiʻi, the water heater is the only major water storage they have at home.

“If you run out of water during a hurricane, that's 80 gallons-worth right there,” says Lagon. “So what if there were a way for us to send an alert during an emergency explaining to people how to tap into their tanks and filter their water? We want to find everything we can to enchant people about their water heaters, bundle that all together, and that's our value-added proposition. Only then can you increase scale.”

Lagon could see approaching a property management company, responsible for multiple thousands of units, and pitching Shifted Energy’s controllers as a leak alert system.

“Or if the heating element goes, we can let them know right away that there's a problem, before the water even gets cold in the tank,” he says. “That will allow them to address the problem before the tenant or customer even knows something has happened. What property management firm wouldn't want that?”

Eyes on 2045

Hawaiʻi's push toward its 100 percent renewable goal has revealed some policies that have yet to catch up with technology. Currently, Hawaii Energy—a ratepayer-funded public benefits program for energy efficiency and conservation—subsidizes solar hot water systems with a $750 instant rebate. A homeowner can also claim State and Federal tax credits for additional 35 and 30 percent, respectively, of the cost of the system afterwards. With most systems costing around $10,000, that generally equates to around $4,500 in subsidies.

And these systems don't always contribute much to the grid: Solar hot water systems don't need power in the middle of the day—but that's when we have the most excess renewables. They do need power at night though, meaning that they often take power from the grid when there's almost no renewables available.

“From a renewables perspective, that's very bad, but from an efficiency and money-saving perspective, that is the best kind of system there is. So that's an interesting dilemma, because we gotta pick one,” muses Lagon. “Are we going to focus on efficiency or on grid-systemic change toward greater reliance on renewables? If we're going to reach our goal by 2045, we can't make every decision based solely on how much money it's going to save the individual. Gas can be cheaper to heat water in some situations than electric, but that's not going to help us reach 100 percent. We need to make choices that benefit the whole system. We can keep the solar rebate, but we're going to need something else to help with the other problems of daytime solar systems.

“There needs to also be a shift in our priorities—in our mentality,” he adds. “Electric cars: can you shift your habits so that you're charging them only during a period where there's excess renewables? Can you better match your use of energy with a good time of use? Energy is cheap at night, expensive at peak and reasonable in the middle of the day. So if you have to dry your clothes in a dryer, do it after 9 p.m. and you'll get that energy at half-price. We don't think that way about energy yet. But we will soon—we'll have no choice.

“Fortunately, we're lucky to have a utility that is willing to explore these non-traditional paths toward renewables,” acknowledges Lagon. “That's not something to take lightly. Sometimes utilities and innovation don't go together, and to try something like this—that didn't have a lot of prior proven success in the real world—is huge.”

Lagon hopes that other states will see what Shifted Energy is doing in Hawaiʻi and decide to implement similar solutions. Counter-intuitively, Hawaiʻi is actually not the best place to be using water heaters as batteries. This is because the water heater acts as a “battery” only to the extent that it actually heats up groundwater from its starting temperature up to 120ºF. Groundwater in Hawaiʻi starts off at about 70ºF, and the energy used to to raise that to 120ºF is only about 10 kWh per day. In a city like Chicago, the amount of energy that a water heater would “store” through heating its water with renewables would be much higher, effectively making it a bigger battery. But that also means that if Shifted Energy's solution can work in Hawaiʻi, it should work just about anywhere in the world.

“This solution is just one part of the puzzle,” says Lagon. “There are many other challenges we will have to overcome if we're going to step into a future where we are 100 percent reliant on renewable energy.”

And what a brighter, cleaner future that will be.


Summit is Hawaii's global magazine of ideas, style and smart living. We're named for Queen Kapiolani's motto, "kulia i ka nuu," strive for the summit. Summit is available on fine newsstands throughout North America and the Asia-Pacific region.

Archipelago Inc.
PO Box 11934
Honolulu, Hawaii 96828
Ikaika Hussey
Creative Director
Mae Ariola
Will Caron
Associate Publisher
Michelle Garcia
Copy Editor
Karen Shishido
Assistant Editor
James Charisma