I recently installed a new water heater and wanted to get an on demand water heater, but since I couldn’t install it myself the cost difference between the 2 was about $3,000. So I went with the less efficient model, knowing that if I went with the more expensive model, I’d never make up the difference.

When I got the quote for the on-demand unit, I asked my plumber what I could do to make my standard water heater more efficient. This is what he recommended:

• Get a thermal blanket and wrap the unit in it, this will help regulate the temp and cut down on heat loss.
  (If in a basement insulate the pipes too – 3/8″ foam works best.) This can reduce your heat loss by up to 45%!
• Play around with the temperature setting and setting it on the lowest temp you can handle (in the summer ours is close to vacation temps b/c we take cool showers and really only need the hot for the dishwasher (we have a high efficiency washer and usually wash on cold).
• Flush your tank once a year to get rid of the built-up sendiment making it more efficient, but also extend the life of the unit. I wrote the date of install on the tank and plan to flush it on that date next year.