A Consumers' Directory is published biannually which lists the manufacturers' model numbers and Energy Factors. Units with an Energy Factor of .60 or higher are considered energy efficient. This label shows, based on the national average cost of fuel, the annual operating costs of that particular water heater. The label also shows how that particular water heater compares with all other comparable models. Insulating the Tank To increase the efficiency of an older, existing water heater, an insulated jacket can be installed.
Most water heaters have some insulation built into the tank.
Unless the insulation is R-10 or more it is recommended that an insulation jacket be added when the water heater is located in an unheated area such as an unfinished basement or garage. Although the surface of the water tank may not feel warm, your tank may still be losing heat. To test, hold your hand against the side of the tank, then hold your hand against something metal in the same room, perhaps a metal shelf, a tool box, etc. Usually the other metal will feel cooler than the water heater tank. The difference is due to heat loss from the tank.