Tesla has introduced the Heat Pump Optimization feature, enabling Powerwall 3 and three-phase Powerwall 3P to instruct compatible heat pumps when to increase operation, allowing homes to store inexpensive or excess solar energy as hot water.
This feature is currently available only in Europe. Tesla has not indicated plans to bring it to the United States or Canada, and the hardware standards it relies on are nearly nonexistent across the Atlantic.
How does Tesla's Heat Pump Optimization work?
According to Tesla's support page, the Powerwall monitors electricity prices and solar generation throughout the day and sends one of two signals to the heat pump: normal operation or enhanced operation.
When the system issues an enhanced operation command, the heat pump heats water to a temperature higher than the home’s current demand, typically storing it in a domestic hot water tank or buffer tank. This stored heat can then support the home during periods of high electricity prices, allowing the heat pump to operate less.
The conditions that trigger enhanced operation depend on the Powerwall's operating mode.
Last week, Tesla Energy summarized on X: "Heat Pump Optimization allows your Powerwall to increase heating when there is excess solar energy or lower energy prices."
Restrictions on SG-Ready
There is no cloud integration with heat pump brands here; it relies on a single cable.
This feature is based on the SG-Ready (Smart Grid Ready) standard, introduced in 2012 by the German Heat Pump Association (BWP) in collaboration with 17 manufacturers. It transmits four operational states via two relay contacts on the heat pump, ranging from grid constraints to forced startup. Tesla here uses only the two recommended states: "Normal" and "Enhanced."
Tesla's requirements are quite specific:
- Powerwall 3 or Powerwall 3P with firmware version 26.26 or higher
- A heat pump certified as SG-Ready, equipped with accessible SG-2 contacts and configured to accept external signals.
- Physical wiring between the Powerwall and heat pump, installed and commissioned by a Tesla-certified installer.
- Tesla App version 4.59.1 or higher
Interestingly, there is no on/off switch in the Tesla app; the feature activates automatically once the wiring is complete.
Why a water heater is a cheap "battery"
What’s truly interesting is the calculation behind this solution. A 300-liter hot water tank, when heated an additional 30 degrees Celsius, can store approximately 10.5 kWh of thermal energy. With a heat pump COP of 3, storing this amount of heat requires only about 3.5 kWh of electricity.
Therefore, many European heat pump households already have hot water tanks that can absorb large amounts of solar energy during midday, without needing to use the lithium-ion battery in the garage. This allows the Powerwall’s 13.5 kWh capacity to be reserved for electricity demands that cannot be stored as heat.
The market size is also substantial. According to BWP data, Germany sold 299,000 heating heat pumps in 2025, a 55% year-over-year increase, and for the first time, they accounted for nearly half of all new heating system sales in the country.
Tesla is not early in this regard either. In 2023, sonnen released a software update enabling its sonnenBatterie to use excess solar energy to power heat pumps, initially supporting NIBE devices, while SG-Ready control has long been a standard feature of German solar energy managers.
Electrek's perspective
This is a smart, low-cost feature—a design that enhances the value of home batteries without adding any additional cells.
In cold climates, heating represents the largest energy load for most households, and water is nearly the cheapest medium for energy storage. It is more sensible to use battery-like control logic to schedule heat pump operation when solar energy is abundant and electricity prices are favorable, rather than discharging batteries at 6 p.m. to power the compressor.
Home batteries are transforming the economics of residential energy, and combining them with smart loads like solar panels and heat pumps is the best way to maximize their value. With electricity prices rising nearly 10% last year and expected to continue climbing, installing solar is one of the best ways to hedge against rising costs. With leasing and PPA options, you can start saving money immediately with zero down payment. To find the best solution for you, check out EnergySage. This free service connects you with hundreds of pre-vetted installers who compete for your business, typically saving you 20% to 30% compared to searching on your own. You won’t receive any sales calls until after you’ve chosen an installer. Click here to get your free quotes.
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