Insulating a water heater may be worth the cost, especially if it is an older water heater that does not come pre-insulated. Insulating the water heater could save up to 9 percent of the energy used to heat the water, meaning the installation may pay for itself in one year.
Insulating a water heater reduces the heat lost through the tank anywhere between 25 and 45 percent. Some utility companies may also offer blankets and insulation at reduced prices, making the installation more worth the value. Owners can also find pre-cut blankets or insulation for cheaper than the insulation that needs to be cut, which may result in the installation paying for itself a little sooner.