Water heating is the second largest energy expense in your home, accounting for about 18% of your utility bill. To conserve hot water, you can fix leaks, install low-flow fixtures, insulate accessible hot water lines, and purchase an ENERGY STAR certified dishwasher and clothes washer.
The best budget option if gas is not available or is expensive is a heat pump water heater, but there are considerations based on your climate for where they can be located to be efficient.
Set too high, or at 140ºF, your water heater can waste anywhere from $36 to $61 annually in standby heat losses. Additional savings will be realized by the lower temperature for consumption (from water demand or use in your home, such as clothes washing, showers, and dishwashing). These may amount to more than $400.
Usually natural gas is the cheapest way to heat water, followed by electricity, with propane being the most expensive.
Assuming you have a modern cylinder you're looking at roughly 20p per day (providing you're not drawing off hot water and replacing it with cold water). Sadly your standing charge will be more than that - you try to do the right thing and turn the boiler off, but still have to pay.
Temperature Is Too High
The most obvious reason for a high water heater gas bill is if the temperature is set too high. According to experts, most homeowners should keep water heater temperatures between 120 and 140 degrees F.
Boil Water Over a Fire
To do this, place water in a pot and suspend the pot by a tripod or center pole, place it on a grate above the flames, or set it directly on hot coals to heat it up.
It's generally much cheaper to heat water using your central heating system, rather than using electricity with an immersion. The exception might be during the summer, when you have your central heating turned off, or if you have an old inefficient boiler.
Typically, a hot water heater that uses a tank will run for 3 to 5 hours per day. So, a 4,000-watt heater used for 3 hours a day at 10¢ per kWh will cost $1.20 per day, about $36.50 per month, or $438 per year.
The maximum Department of Energy recommended water heater temperature setting you should never exceed is 140 degrees Fahrenheit. The lowest recommended setting should never be below 120 degrees Fahrenheit.
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An unusually high water bill is most often caused by a leak or change in water use. Some common causes of high water bills include: A leaking toilet, or a toilet that continues to run after being flushed, most common. A dripping faucet; a faucet drip can waster 20 gallons or more of water a day.
Gas. Natural gas is a good option if you have the connection for it. It can be cheaper than electricity (unless you have solar panels) and because gas rates don't vary through the day, gas hot water systems can heat water as needed.
Tankless water heaters, also known as demand-type or instantaneous water heaters, provide hot water only as it is needed. They don't produce the standby energy losses associated with storage water heaters, which can save money.
Making sure your water heater is always set to at least 120 degrees minimizes this risk, as the water should be hot enough to kill any bacteria. Even though most units will go up to 160 degrees, you really shouldn't ever set the temperature higher than 140 degrees in order to reduce the risk of scalding.
Timers are most cost effective if you don't want to install a heat trap and insulate your water heater tank and pipes. Timers aren't as cost effective or useful on gas water heaters because of their pilot lights.