The Rocky Mountain Institute (RMI) and the Department of Energy recommend the following procedures for making your current water heater more efficient:

1. Add insulation to your current tank. An R-value of 24 or higher is desirable, and most tanks come with less insulation. Wrap your tank with an insulation jacket rated above R-10 but do not cover the thermostat or drain, and on a gas heater do not obstruct the flue or airflow to the gas burner. The Rocky Mountain Institute estimates that the jacket should reduce heat loss through the walls of the tank by 25–45 percent, saving about 4–9 percent of your water heating costs. Jackets are inexpensive and can pay for themselves through energy cost savings within a few months.

2. Insulate hot water pipes wherever you can reach them, and in particular within three feet of the heater, but on gas heaters do not place insulation within 6 inches of the flue. Use the split foam insulation (looks like a hollow tube or hose made out of dense foam) found in hardware and building supply stores at a size that will completely encircle your pipe with no gaps, and tape the seam closed with acrylic tape. The more hot water pipes you can insulate, the less heat will be lost when the water is not running so you will wait less time for hot water to reach the faucet, and therefore waste less water as well as save energy.

3. Turn off the heater when you will be away for long periods of time. An electric heater is easily switched off, but a gas unit may require special procedures for shutting off and relighting the pilot so check the instructions for your unit.

4. If you have an electric hot water heater, installing a rigid board of insulation under the heater keeps heat from escaping into the floor, which the RMI estimates can save 4-9 percent of water heating energy. Gas heaters have drains and pilots on the underside which cannot be blocked by insulation.

5. If you have an electric hot water heater, install a timer on your heater to turn it off during certain times, like during the night when you are sleeping and during peak load times, saving and estimated 5 to 12 percent of water heating energy.

6. Retrofit anti-convection valves and loops to prevent heat loss through the inlet and outlet pipes. These cost under $30 and can pay for themselves within a year.

7. Reduce the temperature of your hot water. Follow the instructions for your particular unit regarding how to reach and reset the thermostat which may be located behind a control panel, necessitating for safety reasons that power to the unit be shut off at the breaker before starting. 120 to 130 degrees is sufficient to provide enough hot water for comfortable showers without the risk of scalding. For each 10-degree reduction, you can save up to 5 percent on your water heating costs. Lower temperatures will also increase the life of your heater.