Aug 08

Improve Your Water Heater Efficiency And Save $125 A Year


Your water heater is one of the most important appliances in your home.  Without it, you’d be taking cold showers, washing your hands with cold water, and your dishwasher would have a rather hard time cleaning all those soiled dinner plates.  To keep your life as convenient as possible, your water heater is working really hard to make sure you have all the hot water you need on a daily basis.  However, in doing so, it’s also using up quite a lot of electricity.  In fact, the only thing in your house using more is likely your refrigerator.

At  an average $0.11 per kWh for electricity, the average American family spends around $1.30 per day for their hot water needs.  This equates to $475 every year.  If you could improve the efficiency of your water heater by just 25% (a very attainable goal), you could save $125 every year.  Below are 5  simple things that you can do to reduce your water heater’s electricity usage. Just be sure to check with your home insurance provider and consult qualified electricians first before making any radical changes to your home.water-heater-thermostat

  • Turn down the thermostat - Your water heater’s thermostat will probably allow you to turn the temperature up to around 160°, but you shouldn’t if you want to save energy.  Most people find that they can get by just fine with their thermostat set to 120° – above that and you’re just paying for water that will serve little purpose but to scald you when you turn a faucet on too hot.
  • pipe-insulationInsulate the hot water pipe - No, you don’t need to undergo any renovation to do this.  Most of the heat that is lost in transmission from the tank to your faucet occurs in the first 6 feet of pipe leaving the water heater.  If you look at yours, you’ll probably find that there is at least 3 feet of exposed pipe that you can insulate.  This can make a big difference.  Any hardware store will carry the insulation you need.  Just be sure to measure the diameter of the pipe before you buy to ensure a snug fit.  Identifying the hot water pipe is really easy, too.  Just feel all of them.  Only one will be hot to the touch.
  • water-heater-jacketPut a jacket on it - Do you get cold in the winter?  Well, so does your water heater! By insulating the whole unit with a water heater jacket, you will improve your water heater’s efficiency by keeping the water it has already heated hot.  When exposed to prolonged cold conditions, the heating element in your unit will have to stay on much more often in order to keep your water hot.  Your local hardware store probably carries one or two that you can choose from.  Here’s one available from Amazon.
  • Clean it out - Over time, sediment and deposits build up in the tank of your water heater, forcing it to work harder and harder to deliver the same performance.  You can eliminate this problem by occasionally cleaning your tank out.  It’s not that difficult and you only need to do it about once a year to really benefit.  Just shut down all power to the unit, connect a garden hose to the emptying spigot and find a safe place to dump the water out.  That’s really all there is to it.  The video below gives an in depth explanation of how to do this safely and effectively for a gas water heater. For an electric one, just make sure you trip the breaker for it at the electrical panel.  Check it out:


  • showerReduce hot water consumption – The best way to reduce your water heating bill is to simply use less hot water.  Take shorter showers.  Use an efficient dishwasher – some newer models have a heater built in for on-demand use. Wash your clothes in cold water – hot water is rarely needed to clean clothes these days with advanced detergents we have access to.  Use less, spend less.  It’s not the easiest concept to master, but it’s still the best.

If you’re extra ambitious:

  • solar-water-heaterInstall a solar water heater – This tip will cost the most to implement ($1000-$3500), but is a fantastic way to substantially reduce your electric water heating needs (well beyond the 25% we were aiming for).  Don’t be put off by the price. You may be eligible for a number tax credits and rebates for installing a system like this.

There, you now have, on average, $125 a year to do something constructive with: put it in your emergency fund, use it to save towards another goal, or donate it to a worthy cause. The best part about these tips are that they all cost nothing or very little to implement.  With the exception of the solar water heater, the materials you buy to implement the other 5 tips will pay for themselves within about 4 months.

Be sure to share any other hot water saving tips you might have up your sleeve!


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  1. Chris

    I’m curious about the water heater jacket. My water heater isn’t ever exposed to cold conditions. It’s in a heated room (actually, probably the hottest room in the house). Will a jacket significantly improve the efficiency of my water heater?


  2. Michael Thomas


    Sounds like you’re in better shape than most. The best way to tell if your water heater needs additional insulation is simply to feel the tank. Is it hot to the touch? If it is, you’ll likely benefit from adding a jacket. Of course, the gains you’ll see won’t be as dramatic as someone who has their water heater installed in their unconditioned basement or garage.

  3. haverwench

    If your water heater is relatively new, it probably has enough insulation already and doesn’t need a jacket. According to the Department of Energy (http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=13070), if your water heater feels warm to the touch, it could use some additional insulation. If not, don’t worry about it.

  4. Kaitlyn Rogers

    We have installed a solar water heater at home and it is also as good as conventional water heaters.~;~

  5. Bradley Thomson

    Solar water heater is a very good technology because it helps conserve electrical energy for heating;’`

  6. Water Cooler :

    water heaters can sometimes fail because of over voltages in the power line “

  7. Franklin Real Estate

    Bought a on demand water heater a few years back and love it. If you are considering purchasing one, do your homework the application required for your location though. They will save you a ton on your energy bills.

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