Unless your water heater’s storage tank already has a high R-value of insulation (at least R-24), adding insulation to it can reduce standby heat losses by 25%–45%. This will save you around 4%–9% in water heating costs.
If you don’t know your water heater tank’s R-value, touch it. A tank that’s warm to the touch needs additional insulation.
Insulating your storage water heater tank is fairly simple and inexpensive, and it will pay for itself in about a year. You can find pre-cut jackets or blankets available from around $10–$20. Choose one with an insulating value of at least R-8. Some utilities sell them at low prices, offer rebates, and even install them at a low or no cost.
You can probably install an insulating pre-cut jacket or blanket on your electric water heater tank yourself. Read and follow the directions carefully. Leave the thermostat access panel(s) uncovered. Don’t set the thermostat above 130ºF on electric water heater with an insulating jacket or blanket—the wiring may overheat.
If your storage water heater doesn’t have heat traps, you can save energy by adding them to your water heating system. They can save you around $15–$30 on your water heating bill by preventing convective heat losses through the inlet and outlet pipes.
Heat traps—valves or loops of pipe—allow water to flow into the water heater tank but prevent unwanted hot-water flow out of the tank. The valves have balls inside that either float or sink into a seat, which stops convection. These specially designed valves come in pairs. The valves are designed differently for use in either the hot or cold water line.
A pair of heat traps costs only around $30. However, unless you can properly solder a pipe joint, heat traps require professional installation by a qualified plumbing and heating contractor. Therefore, heat traps are most cost effective if they’re installed at the same time as the water heater. Today, many new storage water heaters have factory-installed heat traps or have them available as an option.
If you have an electric water heater, you can save an additional 5%–12% of energy by installing a timer that turns it off at night when you don’t use hot water and/or during your utility’s peak demand times.
You can install a timer yourself. They can cost $60 or more, but they can pay for themselves in about 1 year. Timers are most cost effective if you don’t want to install a heat trap and insulate your water heater tank and pipes. Timers aren’t as cost effective or useful on gas water heaters because of their pilot lights.
Contact your utility to see if it offers a demand management program. Some utilities offer “time of use” electricity rates that vary according to the demand on their system. They charge higher rates during “on-peak” times and lower rates during “off-peak” times. Some even offer incentives to customers who allow them to install control devices that shut off electric water heaters during peak demand periods. These control devices may use radio signals that allow a utility to shut off a water heater remotely anytime demand is high. Shut-off periods are generally brief so customers experience no reduction in service.