What is the easiest way of insulation water heater, so that you can save energy cost? Adding insulation water heater can be effective if your water heater's storage tank already has a high R-value of insulation, at least R-24. This will help reduce standby heat losses by 25%–45%, meaning you will save around 4%–9% in water heating costs. Now, how do you know your water heater tank's R-value? Simply touch the tank, if it is warm it needs insulation.

Insulation water heater tank can be is simple and inexpensive, and it will benefit you in about a year. Find some pre-cut jackets or blankets available costing around $10–$20. Choose one with an insulating value of at least R-8.
Insulating an Electric Water Heater Tank

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You can probably install an insulating pre-cut jacket or blanket on your electric water heater tank yourself. Leave the thermostat access panel(s) uncovered. Don't set the thermostat above 130ºF on electric water heater with an insulating jacket or blanket—the wiring may overheat. You also might consider placing a piece of rigid insulation—a bottom board— under the tank of your electric water heater.

This will help prevent heat loss into the floor, saving another 4%–9% of water heating energy. It's best done when installing a new water heater. Water heater gas and oil-fired water heater tanks is more difficult than those for electric water heater tanks. It's best to have a qualified plumbing and heating contractor add the insulation.