Tank water heaters use either gas or electricity to heat water, then store 20 to 80 gallons in an insulated tank for use when a faucet is turned on. The energy usage for demand will vary from summer to winter with the temperature of the incoming water. Lowering the tank temperature, and water usage efficiency, will lower demand costs. Using less hot water is the best savings measure. Standby losses amount to 20 percent to 60 percent of total water heating energy.
Households using less hot water have higher percentage of standby losses.
Lowering the tank temperature and adding extra tank insulation will cut standby losses. With an electric resistance tank, the use of an automatic timer can reduce energy used to reheat water. Distribution losses occur in pipes when hot water flows through them. Insulating pipes and short runs to plumbing fixtures will reduce distribution losses. Install a heat trap at the water heater to stop convection of hot water into the hot and cold water pipes above the water heater.