Water heater tank losses are proportional to their environment. In cold climates, the best location for a water heater is in a heated space. A water heater in an unheated garage or basement can lose much more heat. In southern locations with mild winters and six months of air-conditioning loads, an inside location is of no value—in these places, summer cooling costs might exceed winter hot water savings.
Water heater blankets, available at most home centers and online, are a great strategy for insulating virtually any tank if you have room to wrap it. Blankets are more valuable on tanks in unheated locations in cold climates and covering indoor tanks in areas with high air-conditioning requirements. Even used on a well-insulated tank, the blanket’s low cost will always return the investment over the tank’s 20-year life span. (With care and extra white tape, blankets can be reused on a similar-sized replacement heater.)
Wraps that will cover a 60-gallon tank with an extra insulation value of R-7 to R-10 are available for less than $20. Adding that much foam at the factory could cost more than $100. If you’re buying a new tank, a blanket can save you money immediately—the price difference between a tank with 1 inch of foam and 2 inches is always more than the cost of a wrap.
You can easily see where the $20 blanket with more insulation value than an inch of foam is a good deal. However, with insulation values of R-3 per inch—compared to R-6 per inch for foam, blankets have space limitations—you’ll only be able to wrap so much around the tank depending on the amount of room between the tank and its surroundings.
