This paper discusses the use of EWHs to help balance the active power and assist with the frequency regulation in diesel hybrid mini-grids. A model of 5.5kW-50gal EWH is implemented in Matlab/SIMULIINK in order to observe the impact of varying the set point temperature (Td) on the power consumed by the EWH supplying a typical residential water draw (Wd) profile. Analytical equations are derived and used for estimating how much power an EWH can take or drop during each hour of the day, by varying Td, while keeping the hot water temperature (TH) within acceptable values.