When most people think about energy efficiency, they think of replacing their lightbulbs with LEDs, adding more insulation to their attic, or caulking and sealing drafty spaces. While these are all good steps to take to save money and increase your comfort, one of the biggest energy users in your home, your water heater, is often overlooked.

According to the US Department of Energy, water heating is the second largest energy user in your home (after your HVAC system) accounting for approximately 14% - 18% of your utility bill.

If you think about it, it makes sense. Unlike other household appliances, your home’s water heater operates 24/7 every day of the week for years at a time to keep water hot and available whenever you need it. Therefore, it would make sense to optimize its operation as part of your overall energy savings plan.  

There are four ways you can save money on water heating:

1. Use less hot water

2. Turn down the water heater’s thermostat

3. Insulate your water heater and its pipes

4. Buy a new, more efficient model

Do It Yourself Solutions

The first three options from the above list are things you can do on your own to save money on water heating. The easiest of these is to turn down the thermostat on your water heater to 120 degrees F. This is a safe temperature that will provide the hot water you need without spending more on excess energy.

You can also use less hot water. One of the ways you can do this is by washing your clothes in cold water. Modern detergents and stain removers are strong enough to work well in cold temperatures, so your clothes will come out just as clean as before.

Also, be sure to drain a quart of water from your water heater every three months to prevent sediment buildup. Over time, sediment accumulates at the bottom of the tank and decreases the amount of hot water available. Moreover, it interferes with the heating elements and makes your unit work harder and less efficiently.

Finally, you can insulate your water heater to help it operate more efficiently. This is also an easy DIY project but will require that you purchase the necessary materials at your local home improvement store.

Most modern water heaters are built with insulation already installed in the tank. The way you can tell whether your water heater needs external insulation is to touch it. If it feels warm, then the tank isn’t insulated.

For instructions on how to do this, the Department of Energy has created the following video that explains how to properly insulate your water heater safely:

https://www.energy.gov/energysaver/services/do-it-yourself-energy-savings-projects/savings-project-insulate-your-water

Replacement

If your water heater is old and not as efficient as it once was, it might be a good idea to replace it with a new, more energy efficient model.

The first thing you will want to do is choose a brand with the Energy Star label. This ensures the water heater you select will operate at optimal energy efficiency, so you won’t be spending money on wasted energy.

Next, you need to decide what fuel type makes sense for your home. The majority of homes in the South and Midwest have either natural gas or electric water heaters. In most cases, it’s best to stick with what you already have. However, there may be some instances where you might consider making a change to a different fuel.

For example, if you have a solar panel system on your home, it might make sense to use an electric water heater instead of a natural gas one. This would save a significant amount of money on your gas bill. However, the tradeoff is that you’ll have to buy a bigger tank because electric models don’t recover (heat water) after use as quickly as gas models do. If you don’t own a home solar panel system, then sticking with a high efficiency gas model is your best bet because it will be cheaper to operate than an electric model. Or, if you don’t have a natural gas water heater, you can also purchase a high efficiency electric model. Either will save you money.

Another alternative is to purchase a natural gas tankless water heater. The advantage of a tankless system is that it only operates on demand, or when you need hot water. That means you don’t have a tank system that is working 24 hours a day, so you save money and energy. The drawback is that tankless systems are expensive, and it may not make economic sense for your situation.

Finally, whatever you decide, be sure to check with your local gas or electric utility to see if they offer customer rebates for high efficiency water heaters. Many do and this will help offset the extra cost.

For more tips and information about making your home more energy efficient, we recommend downloading Shine Solar's Energy Guide. Written for homeowners, this free resource provides you with all the information you need about how to become more energy efficient and save money, both in and out of your home.