Keep Your Energy Bills Out of Hot Water. Insulate your water heater to save energy and money, or choose an on-demand hot water heater to save even more.

Water heating is the second largest energy expense in your home. It typically accounts for about 18% of your utility bill.


There are four significant ways to cut your water heating bills:

  1. use less hot water,
  2. turn down the thermostat on your water heater,
  3. insulate your water heater,
  4. or buy a new, more efficient model.


  • Install aerating, low-flow faucets and shower-heads.
  • Repair leaky faucets promptly; a leaky faucet wastes gallons of water in a short period of time.
  • Set the thermostat on your water heater to 120°F to get comfortable hot water for most uses.
  • Insulate your electric hot-water storage tank but be careful not to cover the thermostat. Follow the manufacturer’s recommendations.
  • Insulate your natural gas or oil hot-water storage tank but be careful not to cover the water heater’s top, bottom, thermostat, or burner compartment. Follow the manufacturer’s recommendations; when in doubt, get professional help.
  • Insulate the first 6 feet of the hot and cold water pipes connected to the water heater.
  • If you are in the market for a new dishwasher or clothes washer, consider buying an efficient, water-saving ENERGY STAR® model to reduce hot water use. See the Appliances section for more information.
  • Install heat traps on the hot and cold pipes at the water heater to prevent heat loss. Most new water heaters have built-in heat traps.
  • Drain a quart of water from your water tank every 3 months to remove sediment that impedes heat transfer and lowers the efficiency of your heater. Follow the manufacturer’s directions.
  • Although most water heaters last 10-15 years, it’s best to start shopping now for a new one if yours is more than 7 years old. Doing some research before your heater fails will enable you to select one that most appropriately meets your needs.


  • Buy a new energy-efficient water heater. While it may cost more initially than a standard water heater, the energy savings will continue during the lifetime of the appliance. Look for the ENERGY STAR® and EnergyGuide labels. You can find the ENERGY STAR label on efficient water heaters in the following categories: high-efficiency gas non-condensing, gas condensing, electric heat pump, gas tankless, and solar.
  • Consider natural gas on-demand or tankless water heaters, which heat water directly without using a storage tank. Researchers have found energy savings can be up to 30% compared with a standard natural gas storage tank water heater.
  • Consider installing a drain-water waste heat recovery system. Drain-water, or greywater, heat recovery systems capture the energy from waste hot water — such as showers and dishwashers — to preheat cold water entering the water heater or going to other water fixtures. Energy savings vary depending on individual household usage.
  • Heat pump water heaters can be very cost-effective in some areas. They typically use 50% less electricity to heat water than conventional electric water heaters. If your water heater is located in your basement, it will also provide de-humidification in the summer months. However, this technology can pose some installation challenges, so you should consult with an installer before you purchase one.


Any investment into energy efficient upgrades needs to be carefully considered.   Everything needs to be evaluated; insulation in the home and around pipes, individual usage, local utility rates, tax incentives and so forth.  Most energy efficient upgrades pay-off over time, but can be very difficult to recoup at the point of sale.    Here are some tips to maximize your energy efficient upgrades when selling your home:
  1. Use a GREEN certified REALTOR who has the expertise to educate future buyers on the merits of the upgrades
  2. Keep copies of utilities to show before and after savings to quantify any upgrade into savings per month and prominently advertise these savings
  3. Quantify the reduction in carbon output even if there isn’t a dollar amount associated with it and promote this activity
  4. Invest early in home ownership to capture the highest return on your investment
  5. Buy homes that others have already invested energy-efficiency upgrades into



Activity Gallons per Use
Clothes washer 7
Shower 10
Automatic dishwasher 6
Kitchen faucet flow 2 per minute
Bathroom faucet flow .05 per minute
Total daily average 64

Source: Federal Energy Management Program Energy Cost Calculator, March 2010


Tankless Hot Water Heater ~ A Green Home Feature