How to Save Money on Water Heating

Explore 5 economical ways to save money on water heating. Find out what types of water heaters are the best to buy. This article will show how easily you can protect your water heater from losing the heat energy, increase energy efficiency and save.

How energy is lost during the water heating

Gas water heater

There are two popular types of water heaters you can buy: tankless and tank-type, where the former one is the most common type in North America.

The tank-type is the big cylinder that has hot water stored and available at any point in time. When the water cools down, the gas burner or electric heating elements turn ON to heat water again. Most of the heat energy is lost through the heaters' walls, often called "standby heat loss" and through the vent system.

Tankless heat water only when it is needed so there is no "standby heat loss", and that is why the energy efficiency is higher. The only significant loss is through the flue. Most of the manufacturers today build the heaters that can take advantage of the temperature of the exhaust gases for pre-heating. This technology is known as condensing.

How to protect your water heater from the heat loss

Taking into account how tank-type and tankless water heaters work, here is what you can do to save money on water heating:

  • Buy a high efficient water heater, such as condensing
  • Install a insulation blanket
  • Install low-flow fixtures
  • Lower the temperature
  • Drain the water regularly to remove the deposits
  • Insulate the incoming and outgoing pipes
  • Change the hot water conservation habits

Buy a high efficient water heater

High efficiency is what can really save money on water heating. The most efficient products are those that have the energy factor very high (EF is the measure of the efficiency), usually over 90% (there are some models with 98%).

When looking for the tank-type heaters, consider the models with the 3" inch foam thickness, and R-insulation value of 24. Heat traps and self-cleaning systems are common to see on these high-efficient water heaters. They are easily recognized as they carry the Energy Star blue label (EF is 0.67 or higher). Our recommendation is to buy a condensing water heater - AO Smith Vertex.

Tankless models are more efficient than tank-type (EF is over 0.8) where the Energy Star models are designed with the EF of 0.82 or higher. Check out Rinnai RUR98 and Takagi T-H3.

Water heaters with the least energy loss and highest money savings are condensing models, which take advantage of the heat from flue gases.

If using the hot water occasionally (in the cabins, vacation homes), you might want to consider using the small tankless water heater, such as Tempra from Stiebel Eltron instead of the storage tank-type. No water that sits in the tank, and water is ready in seconds.

Also, if the distance between the fixture and the central water heater require long plumbing, consider installing a point-of-use heater, which will supply only that fixture. How about installing a solar, which will be supplemented with gas or electric?

From the electric-powered type, the best buy are heat pumps as their energy factor is over 2 and they are the only electric type that is Energy Star compliant.

Insulation blanket or jacket

The insulation blanket is recommended for tank-type heaters only, if there is a huge heat loss through the tank walls and if the R-value of its insulation foam is low. If the unit is already high efficient and has thick foam insulation, there is no need for the jacket.

Install low-flow fixtures

Low-flow fixtures can be installed in the shower, so less water is wasted, and less energy goes through the drain. Mixing valves are great for providing an ideal water temperature and preventing hot water burns. Gas water heater timer is another element which helps you save money on water heating.

Reduce the temperature

This is one of the easiest ways to save money on water heating - lower the temperature. Most of the water heaters are factory set to 120 F, not because the manufacturer wants you to save, but they want to prevent scalding burns, especially on seniors and kids. The recommended temperature of hot water, which can be comfortable for a shower and have the temperature high enough for dishes is around 130-140 F. You can save from 3 to 5% on water heating with every 10 F temperature reduction. Most of the thermostats have the mark on the dial showing the most optimal.


Draining is part of the regular maintenance of every heating unit. Both tank-type and tankless water heaters are subjected to sediment and lime-scale build-up due to the hard water issue. This is why it is recommended to drain the water heater once or twice a year. The sediment and lime-scale will cover the heating elements and bottom of the tank and reduce the heat transfer.

Pipe insulation

Since most of the storage tank heaters are installed in the cold garages or unheated rooms, it is essential to insulate the pipes coming in and coming out of the heater and prevent the uncontrolled energy loss.

Shower habit

By changing the habits on how you use the hot water and conserve the energy, you can significantly impact the water heating energy savings. Here are some tips:

  • If using the single-lever tap and want to use cold tap water, keep in mind to push the lever to the cold side, not between or close to the hot side.
  • Also, during the hand-dishwashing, no need to run the hot or warm water when applying the soap. Keep it close and when you are done with cleaning, turn the warm or cold water for rinsing. If using the automatic dishwasher, run the full load, not partial. Also, no need to use hot water to prewash, cold or warm is good enough, as the machine will do the rest.
  • Save money on water heating by taking a shower instead of baths. Less hot water is used when using the shower.

And for the last, proper use and maintenance is vital not only to save money on water heating but to use the heater longer and prolong its life.

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