A major Minnesota utility’s electric water heater program is doing little to reduce carbon emissions — but that could change with a more robust mix of renewable energy sources and green pricing initiatives, according to a new analysis.

Research by Fresh Energy, a Minnesota-based nonprofit that is also the publisher of Midwest Energy News, found that the electric storage water heater program operated by Great River Energy (GRE) emits substantially more carbon than heaters using natural gas or propane, because the utility still depends on coal for two-thirds of its generation.

A generation and transmission cooperative serving more than 685,000 members, GRE is Minnesota’s largest supplier of electricity to cooperative and municipal utilities.

For three decades the company has offered the water heater program, which allows members of its 28 client co-ops to reduce their utility bills by using electricity to heat water rather than natural gas or propane.

Customers agree to allow their water heaters to be charged at night and turned off during the day. They receive a rebate if they buy a water heater and a discount on their bills in return for participating in the program.

The program helps GRE take advantage of cheap, plentiful electricity — including wind energy — at night, while reducing demand during peak times. More than 110,000 customers, or 20 percent of GRE’s client base, participate in the program.

The program is seen as a key step toward reducing direct fossil fuel emissions from homes. At present, though, Fresh Energy’s analysis found the power mix GRE uses results in more than twice as much carbon as the least efficient fossil-fuel water heaters.

The analysis found natural gas and propane heaters have an emissions range between 609 and 739 pounds per megawatt hour (MWh). Electric water heaters served by GRE, in contrast, have an annual emissions rate of 1,607 pounds per MWh. Based on GRE’s projected energy mix, that drops to 1,428 pounds per MWh by 2032, a figure still far above even the least efficient propane and gas-fired water heaters.

Will Nissen, Fresh Energy’s director of energy performance, said the program needs to rely more on renewable energy if it is to be a positive for the environment. In comments to state regulators, Fresh Energy argues GRE “must provide plans to modify and expand ‘beneficial electrification’ efforts such as its water heater program, to provide actual environmental benefits that result from a portfolio of low-carbon and renewable fuels.”

Nissen said an approach he would like to see GRE take is to offer customers an opportunity to buy renewable power as part of the electric water heater program. Or, the utility could simply accelerate investments in clean energy and make clearer how it will expand the program to more customers.

The company’s Wellspring program provides customers an opportunity to buy and support wind power, he noted, and something along those lines for electric water heater customers could work.

Wind energy is a growing part of GRE’s portfolio, he noted, and much of it often comes into the electric grid at night. The influx of wind at night reduces the “carbon intensity on the system,” he said.

Yet a long-range integrated resource plan recently presented to Minnesota regulators does not show enough of a decline in fossil fuel generation over the next 15 years to have much of an impact on emissions, he said.

Still, Fresh Energy and Nissen see electric water heaters as an important strategy in reducing carbon emissions. It shifts demand away from peak hours and drives greater wind development in the Midwest, Nissen said.

GRE responds

Gary Connett, GRE’s director of member services and marketing, pointed out that the electric water heater program serves many clients who live in rural areas of the state without any access to natural gas.

The “program provides cost-competitive hot water with environmental benefits to those members,” he wrote in an email.

The utility has met the carbon reduction goals of the state’s Next Generation Energy Act and has complied with the renewable energy standard, he said. Two coal generation agreements have been terminated and the utility announced some time ago the “difficult decision” to close the Stanton Station, a coal plant in North Dakota.

The program recharges water heaters between 11 p.m. and 7 a.m., when the energy load decreases and wind power generation increases, he pointed out.

The company has reduced carbon emissions by 27 percent over the past decade and it has a “plan to meet future load growth with conservation, renewable energy, natural gas and market purchases,” Connett noted.

He agrees with Nissen about the importance of the electrification of the grid and has been actively promoting a strategy of using electric water heaters for energy storage as chair of a national effort called the Community Storage Initiative.

Sponsored by many large utilities and clean energy organizations, the group wants to promote the sale of more electric water heaters to utilities across the country.

Heating water for residential use consumes around 15 percent of average household use, according to a Brattle Group report. The idea of converting customers to electric water heaters now is part of an electrification plan for the future.

“Many of these electrification technologies, including water heating, are 10 to 20 year investments, and we expect their associated emissions to decline as the market decarbonizes,” he said. “Great River Energy encourages these investments today in order to achieve additional carbon reductions in the future.”

Nissen simply wants a cleaner mix of energy from GRE. He sees the water heater effort as “a great program. We’re going to need innovative storage options to make our system as efficient as possible.”