A picture of a hot water heater on the left hand side with the right hand side showing a graph indicating increased efficiency and a woman with her thumbs up and smiling because she has set her hot water heater to the most energy saving water heater temperature.

Your water heater is only a couple of years old, so you’re shocked that it’s already costing you so much money.

As far as you can tell, there’s nothing wrong with the water heater, but it’s just not as energy efficient as you hoped.

Perhaps it would help if you could reset the water temperature.

But what water heater temperature will reduce energy costs the most while still giving you sufficient hot water to bathe and wash your dishes?

The most energy saving water heater temperature you can set your water heater to is 120 degrees Fahrenheit. Most water heaters operate at least 20 degrees hotter than this. This small switch will not cause problems, as the water will still be hot enough for bathing, cooking, and laundry.

In this article, we’ll go over why the 20-degree temperature drop is significant, how to reset your water heater temperature and some other methods for boosting the energy efficiency of your water heater.

Make sure you keep reading to learn more!

This Is the Most Energy Saving Water Heater Temperature

Worker in blue overalls adjusting a valve on a hot water heater.
Making one simple adjustment on your hot water heater can save you a lot of money in the long run.

The average water heater runs for only three hours per day. If your water heater uses 4,000 watts over those three hours, at a cost per hour of $0.40, then the price per day to use the water heater is $1.20.

That’s not so bad, but per month, your water heater costs you $36, and per year, $438 at least.

You can reduce your spending by making your water heater more energy efficient. That’s why we recommend lowering your water heater temperature.

As discussed in the intro, the optimal water heater temperature for utility bill savings is 120 degrees. However, most water heaters are set to 140 degrees by default.

Many homeowners never consider switching the temperature because the water feels hot enough.

Well, at 120 degrees, the water heater will still be plenty hot. It’s not like you’re going to turn on your hot water faucet and feel nothing but icy cold water.

At 120°F, the hot water will feel nice and hot. It will be perfectly fine for doing the dishes, filling a bucket to mop the floor, or taking a nice hot shower.

We would go so far as to say that nothing feels all that different when your water heater operates at 120 degrees.

Your water heater doesn’t have to work as hard, though, and that’s where the difference comes in. The unit uses less energy when running at 120 degrees versus 140 degrees.

How Much Energy Will You Save By Running Your Water Heater at 120 Degrees?

A hand placed flat beneath a tray holding the words "save energy" with a light bulb cartoon to the left. The hand belongs to a man wearing a suit with the cuff visible.
You can save energy and money by turning your hot water heater down. Learn more about saving energy with our free Energy Efficiency eBook.

Anytime you lessen the energy usage of your water heater, even by a moderate amount, you’ll see savings on your monthly utility bills.

If you set the water heater temperature to 120 degrees, how much less energy does the unit use?

Well, that’s a tricky question, as it depends on how often you run your water heater and how old the unit is. Even the number of people in your household matter, as five people will use more hot water and thus more energy than two people.

As an estimate, we can say you’d expect to shave about 10 percent off your utility bills each month.

Let’s say your utility bill is about the national average of $118 per month per Move.org. A reduction of 10 percent would save you $11.80 per month on your utility bills.

Now your monthly bill would cost you $106.20.  Not bad!

Rather than spend $1,416 a year like you would if your utility bills were priced at $118 each month (not accounting for the unit cost fluctuations), your yearly bills would be only $1,274.40.

Overall, you’re shaving $141.60 a year off your utility bill by reducing your water heater from 140 degrees to 120 degrees. That’s pretty incredible!

How to Lower Your Water Heater Temperature

Wall-mounted thermostat being turned down by a person's hand.
Turning down the temperature on your hot water heater is pretty easy. Just follow the steps below.

If you’re anything like me, you’ll gladly take a 10-percent reduction in your monthly utility bill spending. But how do you change your water heater temperature?

Well, the method varies depending on whether yours is an electric or gas water heater or if it’s tankless.

Let’s go over how you adjust the water heater’s temperature for those models with a tank and the tankless variety.

Changing the Water Temperature of an Electric or Gas Water Heater

If yours is an older gas water heater, accessing the thermostat should be easy enough.

You can typically twist a dial near the bottom of the water heater, and voila, you’ve done it.

The newer the water heater, though, the more complex the adjustment. That doesn’t make it hard, per se, but just a little more involved.

Here’s what you do.

  1. Turn off the water heater at your circuit breaker. You do not want your water heater on while you’re tinkering with it. You could be severely burned if it leaks and any hot water rush through.
  2. Give the water heater at least two hours for the water inside to cool down fully.
  3. When that time has elapsed, look for the access panel on the water heater. This panel is usually insulated, as it houses the thermostat. The access panel might be nearer the bottom of the unit or closer to the top, depending on the model.
  4. Once you’ve found the access panel, detach it with a screwdriver. All you should have to do is loosen the screws that keep the access panel in place.
  5. Next, peel back the insulation.
  6. Now you’ve finally reached the thermostat. You’ll need a flathead screwdriver to adjust it, setting the temperature until it reads 120 degrees.
  7. Some water heaters have two thermostats, one at the top of the unit and a second one at the bottom. If that’s the case for your water heater, you must adjust both thermostats. The upper thermostat should be set several degrees higher.
  8. Put the insulation back where you found it, and then screw the access panel back into place.
  9. Turn the water heater back on or light the pilot light if yours is a gas water heater.
  10. It can take up to three hours for the water temperature to be accurately reflected in a temperature test, so don’t bother testing until then.

Changing the Water Temperature of a Tankless Water Heater

If yours is a tankless water heater, you’ll have an easier time changing the temperature to 120 degrees. Let’s go over what to do.

  1. Find the digital control panel.
  2. Set the temperature manually to 120 degrees.
  3. Wait several hours for the water temperature to lower if you’re going to test the temperature.

More Tips for Making a Water Heater Energy Efficient

A stylized graph showing energy efficiency represented by different colored horizontal arrows of varying colors from green to red.
There are other ways to improve the energy efficiency of your water heater. For even more ideas about how to improve the energy efficiency of your home, why not browse through our Renewable Energy and Energy Efficient Technology archives?

It’s been about two months since you lowered the temperature of your water heater, and you’re pleased!

You have noticed some savings on your utility bills, but you’re itching to make your water heater even more energy efficient.

Here are some tips that will help you do just that!

Reduce Hot Water Usage

A water heater produces a bountiful supply of hot water, but that doesn’t mean you have to use all of it every time.

Whether you take faster showers or take a cold shower from time to time, these small changes can add up.

You’re using your water heater less often, which means it’s not running as much.

Don’t Run the Hot Water Heater Unnecessarily

We mentioned earlier that most water heaters run for three hours a day, but not all. Some are always on standby and produce hot water around the clock.

If that sounds like yours, then be sure to turn the unit off, especially if you won’t be home for a prolonged period, such as if you go away for the weekend.

Insulate the Water Heater

Insulating the water heater tank and pipes is an excellent solution if you want more significant savings on your utility bill. We just published an in-depth guide about how to do that on the blog, so make sure you check it out!


It’s easy to set your water heater thermostat from 140 degrees to 120 degrees, and you could reduce your utility bills by up to 10 percent.

A little difference of 20 degrees in water temperature can significantly change your utility bill!

For more ideas on how to save money on your energy bill, take a look at our article entitled, “39 Ways to Save Up to 30% On Your Energy Bill (Step By Step)“, which will help you save money and benefit the environment.

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