Adding a blanket to old water storage tanks can provide significant energy savings; the insulation value of older tanks is less than R-3.
New storage water heaters have good insulation. If your water storage tank has 1.5 inch or more of foam insulation, or the label indicates an insulation value of US R-10 (Metric System: R-1.8) or more, adding a tank insulation blanket may not be worthwhile. But if it isn't the case, you can save up to 10% in water heating bills, by insulating it.
Note: Typically, you just have to touch the water tank to know if it is poorly insulated. If it is warm to the touch, it needs insulation... Newer tanks may come with energy labels (Energy Guide label, in the USA and Canada) listing the built-in insulation.
Safety and Cares
Before insulating a water tank, take a look at the manufacturer’s instructions or see if there isn't any sticker on the water heater, warning against insulation blankets. It can void the manufacturer's warranty...
Do not forget that the tank air vents, the drain and the flue should have proper clearances; the insulation wrap should never interfere with them.
Follow the manufacturer's instructions. Some are obvious: the tank's thermostat should be left uncovered; never insulate the top of a gas water storage tank, and always repair a leaking tank before installing an insulation blanket. Safety is an important concern.
Gas and oil water storage tanks are more difficult to insulate than electric ones, and unless you are sure of what you are doing, it's best to call a professional to install the insulation.
Cost and R-value
Pre-cut jackets and blankets for water storage tanks are available in hardware stores at prices between $10 and $20; just choose one with a good insulating value: US R-8 (Metric System: R-1.5) or more, 3 inches thick of more.
Electric Water Storage Tanks Insulation
A pre-cut jacket or blanket makes insulation a very easy job, but it's important to read and follow the manufacturer’s instructions.
The instructions should coincide, in their basics, with the steps we list below (steps and images following EERE/EnergySavers instructions):
Image 1,2,3,4, from EERE
Cut an insulation section for the tank top, to fit around its piping. Place it, tape it and fold the corners down; also tape the corners to the tank as shown in Image 1.
Position the blanket around the tank; the ends should not come together over the access panel(s); secure the blanket in place with the belts; fit them snugly over the blanket; do not compress the blanket more than 20% of its thickness (Image 2).
If the heater has the overflow pipe or/and the temperature/pressure relief valve on its side, do not cover it/them; also leave the access panel and the instruction plate uncovered, cutting the insulating blanket accordingly (Images 3 and 4).