How to Save Money on your next Water Heating Bill -
15 Energy Saving Tips

Hot water tap and how to save energyImage by Reto Gerber from Pixabay

Is your energy bill high? Do you want to cut the heating costs without sacrificing your comfort?

Ok. Let's explore 15 economical ways and tips to save money on your next water heating bill. Find out what types of water heaters are the best to buy, what to consider and do, and what to avoid.

This article will show you how easily you can protect your water heater from losing heat energy, increase energy efficiency, reduce the expenses, and save.

Did you know that your water heating bill accounts for around 18% of your home's energy bill? So, instead of paying high energy bills due to our negligence or too much comfort, let's see what we can do to reduce the costs and save.

15 ways to save money on your water heating bill

Below are 15 money-saving water heating tips that can help you reduce your large energy bill:

  1. Lower the temperature on a water heater
  2. Use less hot water
  3. Changing habits of how you use hot water
  4. Buy a high-efficiency water heater
  5. Insulate a water heater
  6. Insulate the pipes
  7. Install energy-saving fixtures
  8. Fix all leaks
  9. Use cold water where applicable
  10. Use Energy Star appliances
  11. Install a timer
  12. Install heat traps
  13. Drain a water heater regularly
  14. Install a drain-water heat recovery system
  15. Use water heaters with the recirculation

How energy is lost during the water heating

Gas water heater

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

Tank-type water heaters look like big cylinders that store hot water, available any time. When the water cools down, the gas burner or electric heating elements turn ON to heat water again. Most heat energy is lost through the heaters' walls, often called "standby heat loss," and through the vent system.

Cheaper models have an efficiency of around 60%, so they are low efficient models. Those models with advanced features and thicker insulation have higher energy factors, while the condensing models are considered ultra-efficient.

Tankless heats water only when needed, so there is no "standby heat loss," which is why energy efficiency is higher. The only significant loss is through the flue. Most manufacturers today build heaters that can take advantage of the higher temperature of the exhaust gases for preheating. This technology is known as condensing, and efficiency goes over 90%.

Either type you plan to buy, get the Energy Star model as their heat loss is the lowest.

Lower the temperature on a water heater

This is one of the easiest ways to save money on water heating - lower the temperature on the thermostat. 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.

The recommended temperature of hot water, which can be comfortable for a shower and have a temperature high enough for dishes, is from 125 to 130 F.

Temperatures below 120 F might not be safe due to potential bacteria growth, while the temperatures above 130 F might be too high, especially for kids and elders.

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 settings.

Use less hot water

Did you know that an average person showers for approximately 8 minutes and uses around 17 gallons of water?

With the bigger family, hot water demand increases so as consumption, resulting in higher energy usage and bills.

So the formula is simple, use less hot water.

Changing habits of how you use hot water

By changing the habits of how you use hot water and conserve energy, you can significantly increase 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 hand-dishwashing, no need to run hot or warm water when applying the soap. Keep it closed and when done 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.

Don't let the hot water run if not used.

Buy a high-efficiency water heater

Buying a water heater with high efficiency (energy factor) is what can really save you money on water heating. The most efficient devices have high energy factors (EF or UEF is the measure of efficiency), which is over 90% (the best models come with an efficiency of 98%).

When searching for tank-type heaters, consider 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 such as AO Smith Vertex or Polaris.

Tankless models are more efficient than tank-type (EF is over 0.8), and the Energy Star models are designed with an EF of 0.82 or higher. Check out Rinnai RUR199 and Takagi T-H3, the most advanced tankless water heaters designed with an efficiency of 0.96.

Water heaters with the least energy loss and highest savings are condensing models designed to take advantage of the "wasted" heat from flue gases.

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

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

The best buy are heat pumps, or hybrids from the electric-powered type, as their energy factor is 2-3 times higher, and they are the only electric type that is Energy Star compliant.

Note: According to CR you can save over $300 on operating costs by switching from electric to gas storage water heater.

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Insulate a water heater by installing an insulation blanket or jacket

The insulation blanket (jacket) is recommended for tank-type heaters only if there is a considerable 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 insulation blanket.

Pipe insulation

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

Install energy-saving fixtures

In order to save more on your water heating bills, you can install one or all of the listed energy-saving fixtures: low-flow fixtures, a mixing valve, and a timer.

Low-flow fixtures are designed to reduce water flow at the fixture and help you use less hot water and energy - there will be less energy going through the drain.

Mixing valves are great for providing an ideal water temperature by mixing both cold and hot water before reaching the tap. These valves are also designed to prevent accidental hot water burns.

An electric timer is another element that helps you save money on water heating by turning the power ON or OFF when needed.

Fix all leaks

Water dripping from a leaky water heating system means wasted water and energy. Hot water can leak from the faucet, water tank, T& P valve, drain valve, loose connections, plumbing, expansion vessel, and other spots. So, check for leaks, and if you cannot repair it, replace it.

Use cold water where applicable

Because we take hot water for granted, we would use it even if we don't need it. Due to negligence, we use hot water (or warm water) in the summer to wash hands, fruits and vegetables, clean dishes, cars, and where we don't have to.

If we use cold water to wash clothes, use a laundry detergent meant for cold temperature washing, and you will get cleaned clothes that will last longer.

Use Energy Star appliances

Check out the Energy Star website to find devices, including water heaters, that are high efficient. Energy Star devices are high efficient and are often eligible for utility rebates and government grants.

Install a timer

An electric timer is used to limit a water heater's usage, saving you money on both electricity and water bills. Having one installed is especially useful during peak hours when the energy cost is in the higher cost bracket.

There are different timers such as countdown timers, box timers, switch timers, programmable timers, Wi-Fi controlled, and gas timers, and the type you install depends mostly on your needs and application.

Install heat traps

Installation of the heat traps, or nipples, is an effective way of preventing heat from escaping the water tank through plumbing. Heat dissipation is possible due to thermosyphon phenomena or natural convection. As they are inexpensive and easy to install, retrofitting your old unit could be a good idea. Most new water heaters have heat traps, factory installed.

Drain a water heater regularly

Draining a water heater is an easy DIY task that will save you money on your heating bill by making your unit efficient again and making the water tank last longer. 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.

Over time your storage tank will collect mineral deposits and other sediments, making a thick layer at the bottom of the tank. The sediment build-up will then act as an insulator between the heat source and water inside the tank, reducing the heat transfer and efficiency. A water heater will work harder and produce less, increasing the cost of heating.

This is why it is recommended to drain a water heater once or twice a year.

Install a drain-water heat recovery system

Install a drain-water heat recovery system and take advantage of the heat coming from hot water used in showers, bathtubs, and sinks. These systems can successfully work with any type of water heaters, as long as used hot water flows down the waste drain. The hot wastewater is used to preheat incoming water leading into a water heater.

Install a water heater with the recirculation

Hot water recirculation is an ideal system for everybody. Nobody likes to wait for hot water to reach the shower while waiting naked. You can either install a separate recirculating system with an existing water heater or buy a tankless water heater with a built-in recirculation system. Either way you go, hot water is ready as soon as you open the tap. This is how you save water and energy.

The main complaint of many homeowners who do not have a recirculation system installed is that they have to wait for hot water. And the time varies, depending on the distance hot water needs to travel.


As you can see from the above 15 water heater saving tips, it is easy to reduce water and energy use, and save money on your water heating. Some of these recommended tasks are DIY projects, while others that are more complicated, such as those that involve installation, require you to contact a professional.

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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