## 2 Demand Response and Residential Customer Segments
### Potential DR Tasks for Electric Water Heaters  
EWH appliances can be classified into three main subclasses: instantaneous (EIWH), resistance (ERWH), and heat pump (HPWH). Energy patterns and conversion are different in each one, and these characteristics explain their suitability to perform in different markets and services. EIWH are not considered in this work because they require a high demand for residential segments (around 10-12 kW); they do not suit well basic energy efficiency (EE) objectives; and their demand is concentrated in very short periods in the day, which limits the DR availability of those appliances.  
Some authors consider that the attractiveness of the end-use loads to participate in DR programs is inversely proportional to load efficiency. This can be explained by the reduced demand; however, in the case of HPWH, this does not apply because (i) two sources of demand can participate (the compressor and the ancillary resistor) and (ii) they have an important energy storage potential without significant additional costs. Four ways of using EWHs as DR&EE resources can be analyzed, considering the relevance of small-sized EWHs in some countries (Figure 1). The main strategies considered for EWH are [12; 13; 14]:  
* Peak shaving (hourly basis): The WH is controlled only on a limited number of days when the system peak is likely to occur (typically 10 to 15 days per season during 2 to 4 h [6]). This strategy is used to get revenue through Capacity Markets.
* Thermal storage (daily basis): Typically, the WH heats at night, and then heating is curtailed during the highest-priced hours of the day. This strategy depends on the size of the WH reservoir (i.e., it benefits larger units), and it has been very common in several countries through different types of ToU tariffs, including direct load management by utilities.
* Fast response: In this strategy, EWHs offer frequency regulation or services to System Operators (SO). Demand resources respond to SO signals (e.g., \"regulation D\" or \"regulation A\" signals in the PJM system in the US) and change their state (ON/OFF). Some of these fluctuations are energy neutral (e.g., regulation D) on an hourly basis, an interesting characteristic of thermal storage because it has a worse or limited performance when the temperature (HPWH) and demand are committed to continuously rise from baseline levels, apart from health concerns above 65 C.
* Energy efficiency: This scenario assumes that customers invest in a more efficient EWH (i.e., HPWH) or that building codes assume this technology for new or refurbished buildings. In this case, the objective is basically to save energy and, secondarily, to get some capacity value from this change. The change in demand is not trivial because it does not depend only on a constant coefficient due to COP; COP changes when ambient and water temperatures do [12], which they can do.  
All these strategies have usually been seen as exclusive by regulators and utilities because aggregation--for example, in Europe--faces important educational, legislative, and regulatory barriers (only 1 of 27 countries in Europe reported aggregation activity in 2022 in all energy markets [13]) but, in the future, customers and aggregators should integrate the development of complex DR products in the demand-side, the supply-side or both (e.g., the engagement of the \"same DR actors\" in several markets and services) due to legislative efforts worldwide [13]. For this task, it is necessary to develop a specific model for each duty, or the integration of several models, capable of providing the necessary feedback to properly perform on these new and complex scenarios.