Conventional sources like wind, solar and geothermal energy are available abundantly in New Zealand. These can be put to use to reduce the dependency on conventional sources. In the present, power systems engineers are trying to incorporate more renew- able sources into the grid. Due to the intermittent nature of many renewable resources, some control has to be implemented to stabilize the system. This thesis report is a document describing the development of a controller for a domestic water heater, which enables the use of the water heater as a reserve to maintain grid performance. The controller modulates hot water heating element power which could help stabilize a grid and minimize transport of energy. The controller takes into account the voltage and frequency as grid parameters and determines how much power has to be given to the heating element so that it doesn't load the grid at the peak time, but also provides hot water to the user all the time. The details of controller specification, design of electrical circuit, PCB design and mechanical design are discussed in this thesis. The testing of the developed controller and modifications required are also presented.