How to save money by insulating your water heater tank


When you build your home you always insulate your walls and your roof to prevent heat loss. This made me wonder what else I can do around the house to prevent even more heat loss. I got the idea to insulate my water heater tank because this way I can save a few bucks each month. Since I got an older water heater I started to do some research on how I can insulate it.

First I checked if my water heater has insulation with an R- value of 24. It did not, that is why I considered it’s time to do some house work and improve it.

By insulating the water heater, I reduced the standby heat loss by 25%-40% and I noticed it saved me around 6% in water heating costs. It might not seem much at first, but in the course of a year this will make a huge difference.

If you are not sure about your water heater’s R-value simply touch it, if it’s warm, then it definitely needs additional insulation.

Here are the items that you need for insulation:

tape measure – Link

marker – Link

scissors –Link

water heater insulating blanket kit – Link

gloves and a dusk mask – LinkLink

electrical or other tape which usually comes with the blanket kit.

The water heater insulation blanket kit can be bought from Amazon, for an example, it’s around 20 bucks and also comes with foil tape. If you are a handy man the other items should be lying around your house, so there will be no need to go and buy new ones.

What you need to verify before getting started:

Before buying the water heater insulation kit first check with your utility company to see if they can offer you a cheaper price. There are some utility companies that install this at a low cost or even for free.

Verify your water heater to see if all is in order. If it leaks you will need a new one.

If you have an electric water heater you should also consider insulating underneath the tank as well. This will help prevent heat loss into the floor.


1. Turn off the water heater


If you have an electric heater turn off the breaker on the electric panel. For gas models turn it to “Pilot” position.

2. Measure the height


At this step you will need to take your measuring tape and check the height of your water heater in order to get the exact size. This needs to be done in order to cut the blanket to fit your model of water heater. You will need to leave the top of the water heater open and it is very important not to block the vent on the top of the gas unit.

3. Use the blanket


Once you have the correct measurement wrap the blanket around the water heater and temporarily tape it in place. The easy way to wrap it is by positioning the blanket so that the ends do not cover the access panels that are situated on the sides of the tank. There are some thanks that have only one access panel, so this will be even easier to wrap.

4. Make use of the marker


Any marker will do, I used a black one for better visibility. Here you will need to mark the areas where the controls are placed, so that you can cut them out. If you have an electrical water heater there will be two panels on the side of the tank. For gas models you will need to use the marker to make an arch-shaped hole around the gas valves and the burner. You will also need to make the hole big enough to cover the areas below the valve and burner. The opening should be at least 1 inch wider than the valve and the burner area. You should also mark the location of the pressure release valve and the pipe.

5. Install the blanket


First you will need to line up perfectly the cut up areas, then tape the blanket permanently.

6. Turn the water heater back on

After the water heater insulating blanket is all set up, you can safely turn back on the water heater. I highly recommend to set the thermostat below 130 F if you have an electrical model because the wiring may overheat.

With these easy steps and materials that do not cost that much, in a year time of using the water heater you will be able to save quite a pretty penny.





Do you know any other methods for insulating the water heater? Share your thoughts in the comments section below.


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