Water Heating Energy Use in Your Home: Where It Goes and What Cuts It
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Water heating energy use in home means the energy spent heating the water that comes out of the taps, showers and appliances. For most households it is one of the largest energy costs after heating and cooling. The U.S. Department of Energy calls water heating the second largest energy expense in a home, and the figures below come from DOE’s Energy Saver guide and from Colorado State University Extension’s work on water heating in Colorado homes.
Quick answer
- DOE says water heating is the second largest energy expense in a home and typically accounts for about 18 percent of energy use.
- Colorado State University Extension gives a Colorado figure of 19 percent of energy use in Colorado homes.
- Extension’s example assumes about 20 gallons of hot water per person per day, which is about 600 gallons per person per month.
- DOE lists four main ways to cut water heating bills: use less hot water, turn down the water heater thermostat, insulate the water heater and pipes, or buy a more efficient model.
- DOE recommends setting the water heater to 120 degrees Fahrenheit, and Extension cites the same 120 degree figure as a standard setting.
How much of a home’s energy goes to water heating
The share of energy used for water heating is a national and regional average, not a fixed number for any one house. DOE’s Energy Saver guide, in its water heating section, says water heating is the second largest energy expense in a typical home and that it accounts for about 18 percent of a home’s energy usage. That places it behind heating and cooling and ahead of most other household uses, although the exact ranking depends on climate and how the home is built.
Colorado State University Extension’s publication on water heating in Colorado homes puts the share at 19 percent of energy use in Colorado homes. The two figures are close, but they come from different sources and different years, so they should be read as estimates of the same general size rather than as a precise measurement. The gap between them is small enough that the practical conclusion is the same: the water heater is worth attention.
The energy is used in two steps. First the heater raises the temperature of cold water entering the home. Then the heated water loses some of its heat on the way to the tap, through the tank walls and through the pipes. Both steps cost money, and the losses are why insulation and temperature settings appear in almost every efficiency recommendation for water heating.
How much hot water a household uses
Hot water use is the other half of the equation. Colorado State University Extension gives an example that assumes about 20 gallons of hot water per person per day. Over a month that comes to about 600 gallons per person. For a household of three, the same example multiplies out to roughly 1,800 gallons of hot water per month. These are planning figures, not measurements of a particular home, and the Extension publication presents them as an example of how to size a water heater and estimate costs.
The volume matters for two reasons. The more hot water a house uses, the more energy the heater must supply, so every reduction in use saves energy in proportion. The volume also determines whether a storage tank or a different type of heater fits the household. Extension’s publication describes storage tanks and on-demand units and explains that the right choice depends on peak hour demand, meaning how much hot water the household draws in the busiest hour.
Use reductions are the first of DOE’s four steps for a reason. A shorter shower or a dishwasher run with a full load uses less hot water and therefore less energy, with no equipment cost. DOE’s guide also points to fixing leaks. It says one drip per second wastes 1,661 gallons of water, which is a small but real part of the water heating bill.
Temperature setting
The temperature the water heater holds is a major control. DOE recommends setting the water heater to 120 degrees Fahrenheit, which it presents as a good balance between comfort and energy use. Colorado State University Extension uses the same 120 degree figure in its worked example, where it assumes the water temperature is 120 degrees Fahrenheit for the hot water supply.
A lower setting reduces the heat loss from the tank and the energy needed to bring the water up to temperature. The DOE guide says that turning down the thermostat is one of the four main ways to reduce water heating costs, and it lists the setting as a simple adjustment for most owners. The sources do not give a single percentage saving for changing the setting in every home, so the savings depend on the starting temperature, the fuel, and the rates the household pays.
Insulating the tank and pipes
Insulation is the second of DOE’s four steps. DOE’s Energy Saver guide lists insulating the water heater and the pipes among the steps that cut water heating costs. The guide says that if the hot water tank is warm to the touch, insulating it could save 7 to 16 percent annually in water heating costs, and that the owner should follow the manufacturer’s recommendations. That range comes from DOE’s guide and should be read with its assumptions in mind.
Colorado State University Extension gives more specific guidance on where to start. It says insulating the first three feet of hot and cold water piping as it leaves the water heater is the most important step to reduce energy loss. The Extension publication also says a tank wrap is most worthwhile when the tank is warm to the touch, and that some new water heater manufacturers do not recommend a wrap when the unit already has enough insulation.
Safety limits apply to insulation near a gas water heater. Extension says to leave at least 6 inches of space between the insulation and a flue. DOE’s pipe insulation job aid says a minimum clearance of 6 inches is kept between pipe insulation and the water heater draft diverter or single wall vent flue. The homeowner should also follow the manufacturer’s directions and the rating plate for the specific heater.
Choosing a more efficient heater
The fourth DOE step is to buy a new, more efficient model. The Extension publication describes storage tank heaters, on-demand units and other types, and it explains that the amount of hot water a household uses and its peak demand should drive the choice. An on-demand unit heats water only when a tap opens, while a storage tank keeps a volume of water hot at all times. Each design has trade-offs in standby loss, capacity and installation, and the sources do not rank them for every household.
Replacing a heater is the largest decision of the four steps, and it should follow the lower-cost steps. A household that has not lowered its use, set the temperature, or insulated the pipes may find that those steps reduce the energy need enough to change the choice of replacement.
Which fuel matters
The fuel source changes the cost of the same energy use. Extension’s publication says savings can be larger when the fuel saved is electricity or propane rather than natural gas, because the dollar cost per unit of energy is higher for those fuels. It also notes that the electric and gas cost comparison depends on local rates. A household should use its own bills when estimating savings, rather than relying on a national average price.
What we could not verify
The sources saved for this article do not give a single national figure for the energy used by water heating in every home, and the 18 percent and 19 percent figures come from different publications and years. The sources also do not give a standard savings value for each measure in every climate, and they do not rank specific water heater models. DOE’s savings range for tank insulation is a general range and not a guarantee.
The DOE guide is dated 2022 and the Extension publication is dated 2019 in its file name. Both should be checked against the current versions on the publishers’ websites before a household makes a purchase.
Hot water use is also tied to the shower head. For how much water a WaterSense shower head can save, see how much water a WaterSense shower head can save, and for the label itself, see what the WaterSense label means on a shower head.
How we chose these sources
This article relies on DOE’s Energy Saver guide and DOE’s pipe insulation job aid for federal guidance, and on Colorado State University Extension for a university extension view of water heating in homes. No retail, manufacturer or blog page is used for any figure. The DOE pipe job aid is a single-page PDF, and the article uses it only for the pipe and clearance points it states.
FAQ
What share of home energy does water heating use?
DOE says water heating typically accounts for about 18 percent of a home’s energy usage. Colorado State University Extension gives 19 percent for Colorado homes.
What temperature should a water heater be set to?
DOE recommends 120 degrees Fahrenheit. Extension uses the same figure in its worked example.
Does insulating pipes save energy?
Both DOE and Extension recommend insulating the pipes near the tank. The savings depend on the house, the fuel and the starting conditions, and the sources do not give one number for every home.
Is a tankless heater always cheaper to run?
No. The sources describe on-demand and storage designs and say the right choice depends on household demand. They do not say one type is always cheaper.
Sources
- U.S. Department of Energy, Energy Saver guide (2022 edition, PDF), https://www.energy.gov/sites/default/files/2022-08/energy-saver-guide-2022.pdf (opened 2026-10-30). Federal source.
- U.S. Department of Energy, Insulate Domestic Hot Water Pipes (job aid, PDF), https://www.energy.gov/sites/default/files/2024-07/23-3_insulate-domestic-hot-water-pipes.pdf (opened 2026-10-30). Federal source.
- Colorado State University Extension, Water Heating in Colorado Homes (Quick Facts, PDF, by C. Weiner), https://sam.extension.colostate.edu/wp-content/uploads/sites/38/2019/08/Energy_WaterHeatCOHomes_10637.pdf (opened 2026-10-30). University extension source.
