How long does the water in a water heater typically stay sufficiently hot with no electricity?
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If you’re not using hot water, the tank will remain hot for a few hours. The problem is that once you start draw water out, it’s replaced by cold, and before you know it, you’ll have only luke-warm water. Six hours is a long time too, but on the other hand, peak demand is probably afternoon, when morning showers are finished, and before after dinner clean up is required, so maybe it’s worth it for the 2% discount. In my opinion, no, but your situation may vary.
It depends on what the temperature is, how well insulated the heater is, and where in your home it is kept. Usually a couple of hours. Find out what they mean by "peak demand" — it might not be at the time you use the water if you mostly shower in the morning. Peak demand *usually* means weekday evenings when everyone is home, and also really hot days when all the a/c’s are running. If you want to have hot showers after work, e.g., this is not a good program for you. But, if you can wait to shower and maybe wash dishes until after 9 or 10pm, it might be a good deal.
I’m not sure why your electric company is focusing on hot water heaters when lots of appliances use electricity when they are not even working. I turn off the power strip for my TV, dvd/vcr, stereo and even the microwave when I am not using them, at work or over night. I have saved about $5-6 a month doing that. If everyone did that, there wouldn’t be a problem during peak demand.
We have a large well insulated tank which is heated by cheap rate electricity at night. It stays hot all day, even after a shower and a couple of loads of washing. Find out from the supply company when the peak rate is. Then if you can arrange to use most of your hot water before then or a couple of hours after it you shouldn’t have any problems, depending of course on the size of your tank in relation to how much hot water you use.