Grid-Aware Water Heaters Get $8M Boost

For most homeowners, the water heater is the most forgettable appliance in the house — until the shower runs cold. But Reservoir, a Boston-area startup, is betting that a smarter, more efficient water heater can not only save money but also help stabilize the electric grid.

Founding a Better Water Heater

Luke Winston-Almanzar, Reservoir's co-founder, comes from the world of 3D printing, where he served as chief business officer at Formlabs. Alongside Gabriel Parisi-Amon and Jake Felser, he set out to build a water heater that he would actually want to buy. His frustration with existing units was personal: “The typical water heater is devoid of intelligence, it’s using a god-awful amount of energy, and my air fryer is smarter than it,” he told TechCrunch. “I was using more energy to heat my water than it takes to drive my electric car.”

From Seed Funding to Neighborhood

Reservoir announced Wednesday that it has raised $8 million in a seed round led by Asymmetric Capital Partners, with participation from Founder Collective and MCJ. The capital will help the company expand its fleet of smart water heaters in the Boston area, its initial market. So far, the company has installed about 100 devices and hopes to reach around 1,000 by the end of next year, according to Winston-Almanzar.

More Than a Water Heater

Water heaters are more consequential than they seem. They account for about 18% of a household's total energy budget and are a leading cause of residential water damage. Reservoir's approach is to turn the water heater into a grid asset. By predicting when hot water will be needed, the device can heat the tank when electricity demand is low and prices are cheap. The heat pump in Reservoir's unit is nearly four times more efficient than an electric water heater and five times more efficient than a natural gas version.

Storing Energy at Home

Storing megawatt-hours of energy as hot water could help stabilize the grid, a benefit that Winston-Almanzar says his company has already demonstrated at the neighborhood level. Aggregating a fleet of these water heaters could allow them to participate in utility demand response programs, which pay large users to avoid drawing power during peak times. Reservoir is exploring ways to use those payments to keep its prices down.

Making It Desirable

For a water heater to sell, it needs to be more than just efficient. “The sustainable product need to just be the better product,” Winston-Almanzar said. Reservoir has added features like an ultrasonic flow sensor that detects plumbing leaks and sends alerts via its app. The Max version includes a recirculation valve for instant hot water, a mixing valve to prevent freezing, and a “party mode” that can deliver up to 150 gallons of hot water from a 50-gallon tank, controlled via touchscreen or app.

Price and Savings

Reservoir's pricing is designed to be competitive. The Max version costs $6,500, and the Core version costs $5,000, with installation included. Massachusetts residents can qualify for a $1,050 rebate, bringing the Core model to $3,950, which is competitive with or cheaper than existing heat pump water heaters. For comparison, an 80-gallon AO Smith unit costs about $3,500, plus installation. Traditional electric water heaters may cost less upfront, but Winston-Almanzar says a Reservoir can save typical Boston homeowners up to $1,000 per year in energy costs, with breakeven well within the company's 10-year warranty.

Cutting Out the Middleman

To speed up sales, Reservoir has started its own plumbing company, a decision inspired by Winston-Almanzar's experience at Formlabs. “We built direct relationships [there] because, in a lot of cases, distributors weren’t embracing the new technology,” he said. This direct approach helps streamline installation and customer service.

What It Means for the Grid

Reservoir's technology comes at a time when heat pump water heaters have struggled to gain market share. If the company succeeds, its connected water heaters could finally push the technology into the mainstream — and, in the process, help reduce strain on the electric grid. The potential is significant: a network of thousands of these devices could act like a virtual power plant, shifting energy use to off-peak hours and earning revenue through demand response. For homeowners, the appeal is simpler: lower energy bills and a smarter appliance that pays for itself over time.