Thermal Battery ROI: Is a 300L or 500L Tank Better for Agile Arbitrage?

The Hot Water Cylinder as a Thermal Battery

A well-insulated hot water cylinder is a thermal energy store. The physics is straightforward: water has a specific heat capacity of 4.18 kJ/kg·K, meaning one kilogram of water stores 4.18 kJ for every degree of temperature rise. For a 300 litre cylinder charged from 20°C to 60°C (a delta-T of 40 K), the stored energy is:

E = V × density × Cp × delta-T = 300 × 1.0 × 4.18 × 40 / 3600 = 13.9 kWh

A 500 litre cylinder under the same conditions stores 23.2 kWh. To put this in context, a typical 10 kWh lithium-ion home battery costs £5,000–£8,000 installed. A 500L unvented cylinder, including the incremental cost over a 300L unit, adds perhaps £1,200–£1,800 to the installed M&E cost — for more than twice the storage capacity.

How Agile Arbitrage Works with Thermal Storage

Octopus Agile is a half-hourly variable tariff where unit rates track the wholesale electricity market. During periods of high renewable generation — typically 2:00–5:00 AM and during windy afternoons — rates regularly fall to 7.5p/kWh or below. During morning peaks (7:00–9:00 AM) and evening peaks (4:00–7:00 PM), rates commonly reach 28–40p/kWh.

Agile automation — using the Integravolt engine to command the ASHP via smart scheduling — charges the thermal store during cheap overnight windows and suppresses ASHP operation during peak periods. The economic value of each kWh of thermal storage is the avoided cost of electricity at peak rate.

For a household importing 3,500 kWh/year for ASHP heating, if 60% of that load can be shifted to 7.5p/kWh from an average otherwise-rate of 24p/kWh, the saving is:

3,500 × 0.60 × (0.24 − 0.075) = £346/year

Why a Larger Cylinder Enables Better Load Shifting

The constraint on Agile load shifting is not the ASHP capacity — it is the thermal store capacity. A 300L cylinder charged to 60°C holds approximately 13.9 kWh. If the daily ASHP heating demand in January is 18 kWh, the store can only pre-charge enough to defer roughly 77% of the demand. The remaining 23% must be imported at whatever rate prevails during the day.

A 500L cylinder changes this calculation entirely. With 23.2 kWh of thermal capacity and an ASHP COP of 2.8 at the overnight ambient (typically 5–8°C), the cylinder can be fully charged using just 8.3 kWh of electrical input in a 3-hour overnight window. This represents 100% load shifting for an average winter day — the ASHP does not need to run at all between 7 AM and 10 PM.

This 100% daytime suppression is the critical threshold for Agile optimisation. Once the load is fully shiftable, you are effectively decoupled from peak pricing on all but the coldest days.

Five-Year TCO: 300L vs 500L Cylinder

Assumptions: 3,500 kWh/year ASHP electrical demand, 60% shiftable to 7.5p vs 40% shiftable, average avoidable peak rate 24p/kWh, 500L upgrade cost £1,400 incremental installed.

Metric	300L Cylinder	500L Cylinder
Max shiftable demand (winter day)	77%	100%
Annual Agile saving	~£208	~£346
Incremental saving vs 300L	—	£138/year
Incremental capital cost	—	~£1,400
Simple payback	—	10.1 years
5-year net position	—	−£710

The simple payback of approximately 10 years looks marginal in isolation. However, this analysis excludes the DHW solar diverter benefit (free hot water May–September from a solar PV diverter) and the value of grid stability services that Agile users will increasingly be able to participate in via virtual power plant schemes. When solar diversion is included, the incremental saving increases to approximately £210–£260/year, reducing payback to 5–7 years.

The Right Specification Decision

For any new build or major renovation with ASHP and solar PV, a 500L unvented cylinder should be the default specification unless there is a physical space constraint. The marginal cost is modest at point of build, the lifetime value is significant, and the cylinder size cannot be changed after the M&E is installed without a major works programme.