Nine things you can do to save on electric hot water

Most people with electric hot water tanks pay too much to heat their hot water. If you have electric hot water heat, you might think the smart thing to do is buy an electric tankless water heater. Some people claim these on-demand heaters are more energy efficient because they only heat water when you need it. See my Electric tankless water heater page for a good many reasons why people are better off sticking with electric hot water tanks, and staying away from these ‘miracle’ cures to high water bills.

There are at least nine things people can do to cut the amount of energy used by electric hot water tanks. Almost all of them also apply to gas water heater tanks, but check with your local fire department or building permits department about using an insulating jacket on a gas water heater, as you may be in violation of local fire codes.

1. Stay away from electric tankless water heaters

Electric hot water tanks keep your water hot all the time – even when you don’t need hot water. Some people use that fact to argue that an electric tankless water heater (on demand heater) will save you energy, because no energy is lost through the tank walls. While in the short term it may look like it’s using less electricity based on what your electricity meter readings say, you are actually using more electricity from the utility company’s perspective. It takes more energy to power these things than tank water heaters, because the utility can’t suddenly put 12,000 watts of extra energy on the grid when it detects your water heater needs electricity. This is especially true because everyone tends to want to use hot water around the same times of the day. For the utility to deal with 10,000 households turning on their shower at 7am, for example, if all of those households have a tankless water heater, the utility has to fire up the generators a half hour to six hours earlier, to ramp up to meet the demand. Tankless electric water heaters create spikes in demand that are a nightmare for utilities to manage, and while you might think you’re saving money now, with more and more utilities on time-of-use metering and peak-use metering, you may wind up heating your water at the day’s peak prices, since peak hot water demand tends to align with peak electricity usage (7-10am and 5-7pm).

2. Buy a heat pump electric hot water heater

A regular electric hot water heater converts electricity directly into heat. You get 100% of your electricity investment out as heat. Sounds like a good deal, right? Well, a heat pump can do substantially better. A heat pump uses electricity to extract heat out of one place and move it to another. For example, my heat pump electric hot water heater draws air from the outdoors, even in the depths of winter, pulls heat out of it, and pumps the exhaust air (substantially colder than the input air) back outside. On a really cold day, a heat pump hot water heater is about as efficient as an electric hot water heater. On any day warmer than ‘really cold’, the heat pump can add more heat energy to your hot water than it consumes in electrical energy. In fact, in warmer weather a heat pump hot water heater can deliver 3-4 times more heat energy to your hot water than the electrictical energy it uses. In other words, it can be 3-4x more “efficient” than your 100% efficient electric hot water heater. See my new section on heat pumps for details on what a heat pump is and how they can cut your costs and your carbon footprint.

3. Turn down the hot water temperature

Set the thermostat on your electric hot water heater lower. Most electric water tanks have the hot water temperature set at 140F / 60C at the factory. You don’t need it that hot and you can actually burn yourself with water that hot. Lower your hot water temperature to 120F / 49C (I have my heat pump water heater set at 115F / 46C and get by just fine). The thermostat is usually accessible through a panel you can remove from the heater. Shut off the breaker to the heater before you do this. You may have to move aside some insulating fiberglass material to find the thermostat but it shouldn’t be too hard. If there is no temperature indicated on the thermostat, just turn it down a bit, and test the new hot water temperature a day later with a thermometer that can handle temperatures up to 150F. Keep adjusting down until you reach 120F (don’t go too much lower than that, there may be a risk of Legionnaire’s disease in the tank if you do). (My heat pump water heater makes this so much easier – there’s a digital display and the temperature is prominently shown there all the time – a few clicks on the screen and the temperature is changed. You can even set it to differen ttemperatures at different times of the day!)

4. Insulate your hot water tank

Although electric hot water tanks are usually very well insulated, adding an extra 1-3 inches of insulation makes them even more efficient. The less heat they lose through the walls of the tank, the less electricity it takes to keep the water in the tank hot.

Buy an insulating hot water tank jacket for your heater. The insulating blanket shown at left is a good entry level water heater insulation blanket – it provides R10 of insulation and comes with plastic tape, all you need. It gets good customer reviews and should pay for itself pretty quickly in energy savings, given how inexpensive it is.

You may also be able to find higher R value insulating tank jackets for electric heaters that are as much as 3 inches thick. They are usually aluminum- or white-coated on the outside. As with the inexpensive kit shown above, the kit usually comes with tape as well.

Regardless of the insulating jacket you choose, completely wrap the unit, except for areas where you need to reach the controls.

5. Install a heat trap on the hot water output

If you don’t already one, you should install a heat trap on the hot water pipe coming out of the tank. This keeps heat from escaping up through the pipes when water isn’t flowing. (Electric hot water tanks should always be installed with such a trap – it’s a cheap part and saves a bundle – but some installers cut corners or don’t know how important the traps are.)

You can either buy an actual heat trap valve, or just add a loop of flexible copper tubing about 3 inches in diameter. Heat rises, so the loop prevents the heat from continuing through the pipe at the point where the loop turns down. If you’re handy with a propane torch and lead-free solder, you could try this yourself, otherwise call a handy person or plumber.

The heat trap shown at right is an inexpensive solution. Two separate heat traps, color coded for the cold water intake and for the hot water output. These have self cleaning fittings that prevent corrosion, and a dielectric inert thermoplastic lining.

Note: Consult your hot water heater installation manual to make sure installing a heat trap will not cause problems for the heater.

6. Insulate all hot water pipes

Put pipe insulation on all hot water pipes you can access. This foam insulation cuts down on heat loss within the pipes, so that more of it comes out of the tap and less of it escapes into the walls of your home.

It also means that for short uses of hot water such as washing your hands, you’ll get water that’s ‘warm enough’ without being fully hot, from what was left in the insulated pipes. That means less hot water drawn out of the hot water heater.

You can generally save by buying insulating pipe wrap in bulk. Several wall thicknesses are available. The thicker you go, the more you save, but thicker pipe wrap can be quite costly. I suggest going for a black foam pipe wrap that has a single slit down its length, and removable tape that exposes an adhesive on the cut edge, so that the wrap can be effectively sealed. Stay away from pipe covers that have a spiral cut to them, as that produces a continuous gap of heat leakage around the pipe. Also avoid the tape wrap as it doesn’t provide as much insulating value, and if you wrap it too tightly you actually decrease its insulation value.

7. Leaving town? Turn it off!

Why do people leave electric hot water tanks running for days at a time when they’re not there to use hot water? If you leave the house for more than one or two days, turn off the heater! Turn off the circuit breaker to the hot water heater when you go on holiday or away for the weekend. In fact, do this a few hours or even a day before you leave, there will probably still be enough hot water in the tank to take a shower, do dishes, and so on.

If you have a heat pump water heater, these often come with a data connection – so you can turn it off even after you’ve left town!

8. Put your heater on a timer

Electric water heaters typically have good enough insulation (especially if you add a hot water insulating blanket or “jacket” as described in tip number 3 above) that they can typically hold their hot water a long time at a fairly comfortable temperature.

Still, if you only need the really hot water at certain times of the day, and because there is continual heat loss through the tank walls and pipes on even the most heavily insulated water heater, you may save energy by having your heater automatically switch on or off based on your typical schedule.

The electric hot water timer shown at the left can handle up to 250 volts and 25 amps. It provides up to 12 on/off settings per day. Set it to turn on your hot water heater in time for your morning shower, then turn off until late afternoon when you might need hot water for dishes or a bath.

This product and other hot water tank timers Intermatic get great customer reviews. Several Intermatic hot water timers are available from in addition to the one pictured, you can purchase the T104-20 (up to 40 amps) and a 7-day timer.

Customers reviewing these products report savings of up to 20% on their electric bills, though of course this is no guarantee you will save. Remember that if you follow the other tips on this page, you won’t save as much, because some of those tips will reduce heat loss from the tank, so shutting it off periodically is of less benefit.

The other way in which you can save money with electric hot water timers such as these is by taking advantage of lower electricity prices during off-peak periods. Many electricity suppliers charge more for electricity during business hours (or on extremely hot summer days or extremely cold winter nights, when the use of air conditioners or electric heaters peaks). By setting your timer to turn off during peak usage, you can heat the tank when electricity is cheaper. Unless you do several loads of laundry or fill a huge bathtub with the hot water tank during the peak period when the heater is off, you should have plenty of hot water and you’ll save money. (You won’t save energy in terms of kilowatt hours used in total, but you will be reducing your ecological footprint because the utility won’t have to burn as much coal or natural gas to meet peak load demand.)

Of course, if you buy a heat pump water heater you may well get this timer functionality as part of the base package, and you can program it remotely from the comfort of your cell phone!

8. Build your own solar hot water heater

You can easily build your own solar water heater and save up to 33% off your electric bill every month while helping the environment. And at just $3 for the Kindle edition, the payback on this book is super-fast (of course, there is the cost of materials to actually build the collector).

This do-it-yourself solar water heater guide is easy to follow with step-by-step instructions and is very affordable. It doesn’t replace your existing hot water heater – it pre-heats the water entering your hot water heater so that less natural gas or electrical energy is used to heat your hot water. You’ll still have hot water night or day – but you could save hundreds a year on hot water costs. Electric hot water tanks with a solar preheater can put a huge dent in your electricity bill!

This could be a great money-saving project. If you have kids it can be a great way to teach them about energy efficiency and solar energy, and a fun project to work on with them.

And finally, don’t use it if you don’t need it!

There you go – nine things people can do that make electric hot water tanks more efficient. A couple of other points:

  • If you have time-of-day metering, where you pay more for electricity at certain times than at others, you should consider buying a storage hot water tank. These electric hot water tanks are at the opposite extreme from on-demand electric heaters. They store up heat in a very well insulated tank when electricity is cheap, so you don’t have to use electricity to heat water when the electricity is expensive.
  • Of course, anything you can do to reduce your use of hot water will help. Wash laundry in cold water only (most of the energy used to wash clothes comes from heating the water; and clothes last longer when washed in cold water). Put low-flow shower heads on your showers, and aerators on your faucets. Take shorter showers.
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