7 Ways To Lower Water Heater Costs

Photo: iStock photo

Your water heater can account for 13% of home energy costs.  The good news is that there are small, easy tweaks you can make to lower those costs and conserve energy at the same time. 

Use less
Nora has a bunch of great suggestions to reducing water use, but when it comes to hot water specifically, it's the shower that keeps most people raising the dial on their water heaters. Use low-flow showerheads, take quicker showers, turn off the water when you are soaping up, and stick with mild, lukewarm water. It's really not so bad -- trying to change your shower habits.  Try going without a water heater at all, and you'll realize you need a lot less hot water than you think.

Also consider using cold water to wash your clothes. About 90% of the energy use in a clothes washer goes to water heating. Cold water washing also helps clothes last longer!

Turn it down
Your water heater maintains its temperature 24 hours a day, 7 days a week.  That takes a lot of energy.  The standard setting is 140ºF but most households should get by comfortably at 120ºF.  For every 10ºF you turn down on your water heater, you save 3%-5% in energy costs. Turning it down to 120ºF could cut your costs by 6%-10%.  As long as you are reducing your use with the tips above, you won't even notice.  Make sure to consult your manual for proper instructions on adjusting the thermostat. For example, the electricity should be turned off before adjusting electric water heaters.

Turn it off
If you're going off on vacation, turn the temperature way down, or completely off. When you get home, you'll just need to wait about an hour to reheat before the hot water gets back in service. If you have a gas heater, make sure you know how to relight the pilot light before turning it off (or just turn it down without completely turning it off).

Adding insulation is inexpensive and can reduce standby heat losses by 25%-45%, saving you 4%-9% in water heating costs. Check to see if your heater has a R-value of at least 24 (if your water heater is less than ten years old, it’s likely it’s already optimally insulated). You can also do a touch test – if it’s warm to the touch, it needs additional insulation. Make sure to check your manual for insulation instructions.

Set a timer
Again, a lot of energy is used to keep the water hot 24 hours a day. And really, you only need it a few times a day. If you have an electric water heater, a timer can be installed to turn it off during off peak hours (at night after you go to bed). This can save 5%-12% of energy. For gas heaters, you can keep it turned down most of the time, and then manually turn it up about a half hour before you need it. Timers cost about $60 and should pay for themselves in about a year.

Hot water that goes down the drain carries away energy with it. That can be 80%–90% of the energy used to heat water in a home. Drain-water (or greywater) heat recovery systems capture this energy to preheat cold water entering the water heater or going to other water fixtures. Heat can be recovered from hot water used in showers, sinks, dishwashers, and clothes washers. Prices for drain-water heat recovery systems range from $300 to $500 (and you’ll need a qualified plumbing and heating contractor to install the system). It can take 2.5 to 7 years to recover that cost in savings, depending on how often the system is used.

Buy a more efficient one
If your water heater is old, it might be good to look into getting a new one. New water heaters today are considerably more energy efficient than those of 20 years ago. In addition, Energy Star models can be 15% more efficient than standard models. Look for one with heat traps, which prevents convective heat losses through the inlet and outlet pipes. Find the best type of water heater for your home and look for rebates and incentives for energy-efficient appliances and equipment.


Average: 5 (1 vote)
Your rating: None

Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.

Wise Bread is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

Guest's picture

I have taken to showering only every other day.

On the alternate days, I wash my face and shave with 2 cups of water I heat in the microwave for 5 minutes (to near boiling).

This costs 2 cents and uses 0.125 KW/hrs worth of electricity.

I mix a little cold water in with it to bring it down to a tolerable temperature, wash my face, shave, and I'm done.

I find that I really don't need to shower every day and that the face washing and shaving ritual makes me feel just as good as a shower.

If you don't have hot water, you could use the same trick but with a quart or so of hot water from the microwave in a washtub and have an excellent hot sponge bath. Add a small tupperware container to scoop up the hot water and you can even shampoo your hair and rinse it.

This new "habit" has saved me a lot of time in the mornings and has cut my hot water usage just about in half.\

When I do use the shower, I leave the water in the tub all day so the heat doesn't get wasted, then I scoop the water out and use it to flush the toilet. If people really want to get going on saving water too! If you live with roommates this won't work unless you have a container to store the hot water in.

Guest's picture
poor boomer

Um, go tankless?

Guest's picture

tankless will work wonderfully at lowering heating bills IF your household is a quiet one - couple or few ppl who aren't home most of the time. if you've got a stay-at-home mom with kids, however, heating bills will actually increase bec the tankless has to fire up every time someone turns on the tap, as opposed to a standard reservoir setup that keeps a ready supply on hand and only kicks on when the temp dips too low.

Guest's picture

If you get a simple $12 water pump (not a siphon) (like at Autozone--the kind you use to transfer or siphon gas and oil/fluids) and a 5 gal bucket, you can pump the hot water out of the tub and into it, cover it, and leave it there until it reaches ambient temperature. Then you could use the water to either fill the toilet flush tank, or to use to wash clothes in your clothes washer, or just dump it down the drain.

Don't do this if you have toddlers in your apartment as it is a drowning hazard to have a 5 gal bucket full of water (unless you firmly secure the lid).

Guest's picture

My wife and I had to replace our 20-year-old natural-gas heating system, so we went with a 95-percent efficiency one, and had a 10-year-old water heater (a cheap one that did have built-in insulation) removed and replaced at the same time with a tankless.

The whole thing wasn't cheap, but we're already seeing benefits. I expect that over 10 years with repairs and maintenance that we'll likely wind up ahead of a comparable system. If energy prices go up, as is very likely now, then the system will pay for itself.

We find that there are a few things to get used to. We have infinite hot water, but it takes a good 30 to 45 seconds (as opposed to about 15 to 20 with a hot water heater) for the water to get good and hot and reach the faucet. There are ways around that, including capturing the water for re-use until it gets hot. We do a little of that.

In Seattle, water isn't free, and we sometimes have shortages, but I'm more inclined to waste a little water than a lot of energy.

Guest's picture

We turn our heat down to 50 or 55 but it never occurred to me that that water is sitting there being kept hot, day in and day out, the whole time we are gone.

I wonder, though, if it is safe to turn it off in cold climates? Would that affect whether the pipes would freeze? I will have to ask my plumber uncle about this. Thanks for a money-saving idea that I NEVER thought of!

Guest's picture

My husband installed our water heater timer (finally!) and it has already been saving us money! We are on the savings plan through our electricity company - 9am to 9pm are the "peak hours". I have the timer on from 4am to 9am (off peak) and it is only on from 5-7pm during the day. So far it has worked out great. My husband installed the timer in a convenient location so if for some reason I use more water than normal it's simple to turn the switch on so I can get the water to heat up again.

Guest's picture

We keep our house temperature at 60 degrees or lower during the winter, so sometimes the shower is where we get warm (no turning it off to lather up)! I figure it's cheaper to take a longer hot shower than to raise the thermostat for the whole house. In addition, because we re-use the shower water (flushing toilets, etc.), that warm water contributes to warmer air temps (if only in the bathroom). In summer, of course, none of this applies.

Guest's picture

These sound like good tips :)

Just a word of caution... before you turn down the heat on your tank you should make sure it's safe to do so. I did some research on this subject a few months ago and found out that turning down your heat can actually put you at risk for legionaire's disease -- which can be particularly dangerous for children, the elderly and anyone who is immune compromised.

In some cases, it has to do with how the heater is designed. For example, bacteria can grow in the cooler water at the bottom of the tank, particularly in electric heaters. Bacteria can also build up when you turn your heater down while you're away. (I'm not sure about timers).

It just pays to check on the design and model you're using. For instance, some electric heaters shouldn't go below 140F (60 C), but you can turn gas and oil-fire ones down to the "medium" setting (no lower than 49C, or 120F).

As an alternative, some sources I checked recommended installing water mixing valves as a way to cut down on hot water use.

(I've linked the article I wrote to my name in case anyone wants to check my sources).

Guest's picture

Leaving a water heater @ 140F is dangerous.

140F water presents a huge scald risk if your plumbing doesn't already have mixing valves.

It's a particular hazard for small children.

120F water is plenty hot, and at that temperature you'll never have to worry about burns.

Guest's picture

You are absolutely correct. But even 130-140° water gives you 6+ seconds. Here's a chart you see in water heater manuals:


Listen to Elizabeth though. If you have an electric water heater, Legionella bacteria is a real problem. If your water heater is gas, don't worry.


Legionella requires 123°F at least to die. So don't set it to 115° to save money!

140° or higher settings encourage calcium deposits too, so don't crank it too high.

130°F will SLOWLY kill the Legionella in 6 hours. 140° will kill them in 1/2 hour. So 137-139° will kill them fairly quickly without encouraging calcium deposits on the inside of your tank.

Or get a natural gas hot water heater... but they have their own problems.

This is not alarmism - you can die from bacteria in warm/hot water! An Australian woman on MeFi posted recently how her husband puked his guts out and was bedridden after using bathtub grey water on their garden after the water sat in the tub for 24+ hours at 95°+ F weather. Who knows what was growing in that tub...

I really liked this WiseBread article - full of good advice! Water heating is a big monthly expense. Just make sure you heat that water hot enough for health and safety!

Fred Lee's picture
Fred Lee

I get around this problem by only showering once a month and then, only with cold water. Especially in the dead of winter.

Good ideas on saving money, and also helping the environment. I'm amazed how long people shower, or how often. Especially in water strapped areas, the thing to do it get in and get out.

Lynn Truong's picture

Thanks for the information about bacteria.  The 120 degree setting was from the U.S. Department of Energy site, but perhaps there are other factors, including your location and definitely the type of water heater.

Guest's picture


Guest's picture

Here's another way to save, use a two gallon bucket and scooper and bath with that you'll know how much water your using, usually two buckets sometimes three and it works really well. Imagine how much money you'll save on water and electricity.

Guest's picture

Thanks for the good, practical tips, Lynn. I just replaced my 18-year old water heater (I think the average life is somewhere between 10 and 15 years, so it definitely overstayed its welcome). Turning off the water heater when I'm away from home or setting it to "vacation mode" definitely makes a difference. Great tip for all homeowners, something I didn't know for a long time. For other readers who have to replace their water heaters soon, here's how I saved about $1,000 on labor costs on mine: