The U.S. Department of Energy (DOE) says that if your hot water tank is warm to the touch, insulating it can save 7% to 16% a year on water heating costs. Insulating the hot water pipes can save another 3% to 4%.
Those figures come from one official source, so this page sticks to what it says. Here's how to tell whether a blanket is worth it for your tank.
How Much Does a Water Heater Blanket Save?
The DOE Energy Saver Guide says insulating a tank that's warm to the touch saves 7% to 16% a year on water heating costs. The same guide calls water heating the second-largest energy expense in your home, typically about 18% of your energy use.
| Step (DOE Energy Saver Guide) | Savings the DOE gives |
|---|---|
| Insulate a tank that's warm to the touch | 7%–16% a year on water heating costs |
| Insulate the hot water pipes | An additional 3%–4% a year on water heating |
| Insulate under an electric water heater's tank | Another 4%–9% of water heating energy |
The percentages apply to your water heating costs, not your whole energy bill.
Does My Water Heater Need a Blanket?
Use the DOE's test: if the tank is warm to the touch, it's losing heat, and insulation can help. The DOE says to follow the manufacturer's recommendations, so check your water heater's label and manual before wrapping it.
The DOE also notes that most new water heaters already have built-in heat traps, which prevent heat loss at the pipes.
Is Pipe Insulation Worth Adding Too?
The DOE says insulating hot water pipes can reduce heat loss and save an additional 3% to 4% a year on water heating. It also lets you lower the temperature setting.
For electric water heaters, the DOE adds that insulating underneath the tank could save another 4% to 9% of water heating energy.
What Else Cuts Water Heating Costs?
The DOE lists four main ways: use less hot water, turn down the water heater's thermostat, insulate the water heater and pipes, or buy a more efficient model. It suggests a setting of 120°F, which it considers safe for most people.
Other steps from the same guide:
- Install heat traps on the hot and cold pipes at the water heater, if yours doesn't have them built in.
- Drain a quart of water from the tank every 3 months to remove sediment, following the manufacturer's directions.
- Install low-flow faucet aerators and showerheads, and repair leaky faucets promptly.
The DOE says most storage water heaters last 10 to 15 years. If yours is near the end of its life, a new model may save more than a blanket, and our heat pump water heater rebates guide lists what California utilities pay.
Can I Get a Water Heater Blanket Free?
Some income-qualified SDG&E customers can. As of October 9, 2026, SDG&E's Energy Savings Assistance program lists a water heater blanket and heater pipe insulation among its ESA Basic Plus items, provided at no cost to customers who qualify and document their income.
Our San Diego water heater rebates guide covers who qualifies for SDG&E's program and how to apply.
Official Sources
The savings figures come from the DOE, and the no-cost offer from SDG&E's own page, both checked on October 9, 2026.
- DOE Energy Saver Guide, the Water Heating section with the 7%–16%, 3%–4% and 4%–9% figures
- SDG&E Energy Savings Assistance, which lists water heater blankets and pipe insulation
Frequently Asked Questions
Is a water heater insulation blanket worth it?
It can be if your tank is warm to the touch. The DOE says insulating such a tank saves 7% to 16% a year on water heating costs.
How much does pipe insulation save?
The DOE puts it at an additional 3% to 4% a year on water heating, and says it also lets you lower the water heater's temperature setting.
What temperature should I set my water heater to?
The DOE suggests 120°F, a temperature it considers safe for most of the population.
Thinking about a new water heater instead? See the verified rebates for your address with the free rebate calculator.