A water heating control and storage system, including an insulated tank for containing water to be heated. The tank has at least two heating elements, including an upper heating element and a lower heating element. An operation control device receives a demand response signal and enables each element to independently heat water for usage. A method for controlling a water heating storage system includes providing an insulated tank for containing water to be heated; providing an upper heating element with a thermostat and thermal limiting device and a lower heating element with a thermostat and thermal limiting device to heat upper and lower portions of water inside the tank; and providing a pair of switches for enabling each of the heating elements to independently heat upper and lower portions of the water for usage.