Is your electric water heater warm to the touch? If it is, then you need to insulate it.
Insulating a water heater can cut standby heat loss by about 25% and save up to 16% on your water heating bill, according to the U.S. Department of Energy.
Pre-cut blankets or jackets for water heaters are available for about $20, and installation can be done in about an hour. Before installing insulation on your water heater, be sure that your system is not leaking. Leaky tanks need to be replaced.
To install insulation on an electric water heater, follow these steps outlined on energy.gov:
Turn off the water heater. For electric water heaters, turn off the breaker on the electrical panel. Measure the height of the water heater and cut the blanket to length. Leave the top of the water heater exposed, especially on a gas unit for which it is important to leave the vent uncovered.
Wrap the insulation around the water heater and secure temporarily with tape. Position the blanket or jacket to where the ends do not come together over the access panels on the sides of the water tank.
Use a marker to mark where the controls are so you can cut them out. Electric units usually have two panels on the side of the tank. Also mark the area where the pipe sticks out of the side of the water heater.
Install the blanket. Line up the cut-out areas carefully, then secure the insulation with tape.
Turn the water heater back on. Turn the breaker back on, and be sure to set the thermostat to an energy-efficient 120 degrees. A hotter setting could cause electrical wiring to overheat.
Remember, heat loss can also occur from hot water pipes, so insulating those can result in energy savings, too.