7 Ways to Lower Water Heating Costs

Key Points 

  • Water heating accounts for nearly 10 percent of total energy use in commercial buildings.
  • Maintenance and conservation measures reduce hot water demand and operating costs.
  • If your system is more than 10 years old, consider upgrading to energy-efficient technologies.


Water heating accounts for nearly 10 percent of total energy use in commercial buildings. For facilities such as hotels and restaurants, water heating represents a much larger share of overall energy consumption. Reducing energy used for water heating can substantially lower your operating costs. Start by reducing the demand for hot water through conservation measures and by matching water temperature to the task. Next, consider upgrading to high-efficiency water heating equipment.


Energy-Saving Measures

These low-cost maintenance and operations measures will reduce hot water demand and increase heating equipment efficiency: Reduce hot water temperature to 120°F for safe cleaning and laundering.


  • Install low-flow shower heads and aerated faucets to reduce the amount of hot water used for showers and hand washing.
  • Repair leaks as soon as possible. Dripping faucets and leaks in water-using equipment not only wastes water, it also wastes the energy used to heat that water.
  • Insulate tanks and hot-water lines. Only in recent years have manufacturers installed adequate amounts of insulation in water heater tanks. Even with newer units, insulation can help to reduce heat loss. Hot-water lines should be insulated from the heater to the end use.
  • Limit operating hours of circulating pumps. Facilities often circulate hot water to speed delivery upon demand. Turn off circulating pumps when the facility is not in use (such as nights and weekends) to reduce the cost to operate pumps, as well as heat loss through pipes.
  • Eliminate waste by repairing or replacing failed shower diverter valves that cause a portion of the water to be dumped at a user’s feet. This leakage is often not reported to maintenance staff.
  • For facilities with laundry or kitchen operations, operate clothes washers and dishwashers only when you have a full load. Wash clothing and fabrics on cold or warm water cycles whenever possible.


Energy-Efficient Water Heating Technologies

If your water heating system is more than 10 years old, consider replacing it with one of the following energy-efficient technologies:

  • Tankless or demand water heaters eliminate the standby losses of traditional tank units by heating water only when it is needed. They are typically located at the point of use and are most effective in areas with varying usage, such as a break room or employee restrooms.
  • Direct-fire water heaters mix the heat of combustion directly with incoming water, achieving efficiencies of 98 percent or more, while eliminating standby losses. Though expensive, these systems can be cost-effective for facilities using large quantities of hot water.


Heat Recovery

Heat recovery is the capture of energy from water that would otherwise be lost. Using recovered heat to heat or preheat water is cost effective in facilities with high hot water demand, such as hotels and restaurants. Waste heat temperatures must be high enough to serve as a useful heat source. Potential waste heat sources include heat pumps, chillers, hot air from kitchens and laundries, steam condensate and wastewater drain lines. Consider heat recovery when replacing heating and cooling systems, refrigeration systems or processing equipment.