For commercial businesses, energy use is always a large operational expense. Water heating and water usage can be an overlooked contributor to the bill. Whether you’re trying to be more conservation-focused or just interested in reducing energy consumption to boost your bottom line, your HVAC equipment and your commercial water heater are key areas of focus.
8 Steps for Ensuring Water Heating Efficiency
Although your water heater isn’t likely your biggest energy user, it’s essential to examine how you use water. It’s especially important for areas where water usage is restricted and where water and energy bills can quickly rise during the busy months.
In many cases, water heating can be improved by making small, strategic adjustments to your system and usage habits, resulting in noticeable efficiency gains and cost savings.
Whether you’re running a restaurant, hotel, apartment complex, or fitness facility, being conservative with water is beneficial to your bills and the planet. Today, we’ll explore the smart and small changes that can impact your commercial water heater energy use.
Why does water heating efficiency matter? Isn’t this just a place to nickel and dime? According to the US Department of Energy (DOE), commercial appliances, like water heaters, account for about 22% of energy use for businesses. Of course, that percentage increases for businesses within the food and hospitality industry, as well as in many other sectors.
Heating water consumes large amounts of energy, particularly when it’s used continuously for high-volume demands. Though the benefit of ensuring your commercial water heater is efficient is lower monthly bills, other areas may also benefit.
By improving the efficiency and usage of your commercial water heater, you can extend the lifespan of your equipment. It can also help you reduce maintenance costs, especially if your water heater is older or no longer performing well.
Even if you’re not sure you’re ready for a system overhaul or an update to your commercial water heater, there are a few steps you can take to start seeing some of these water reduction benefits.
1. Adjust the Water Heater Setpoint Temperature
Most commercial water heaters are set at 140°F because that temperature is needed to meet specific codes. It’s important to note that depending on your business and industry regulations, you may not need water to be that hot.
In some cases, this can give you the opportunity to lower the setpoint temperature by 5-10°F. If this applies to your business, it can reduce your standby and distribution losses. Check local codes and public health guidelines to confirm your recommended range, as it may vary by application (for some, it is 120°F–130°F).
Now, if you’re running a restaurant or a healthcare facility, you shouldn’t opt for lower temperatures (and risk failing sanitation requirements). However, for some businesses, such as offices, gyms, and multi-family dwellings, lower temperatures may still be within a safe range.
2. Insulate Pipes and Storage Tanks
Another energy issue is heating loss through uninsulated pipes and tanks, particularly in older buildings. Even if your commercial water heater is installed correctly and well-insulated, unprotected pipes and storage tanks can result in heat loss.
For pipes, you generally want to use closed-cell foam insulation, specifically in unconditioned spaces. The first 3-6 feet of hot and cold water lines should be insulated, and if you have an older storage tank, you may also want to ask your water heating professional about the idea of an insulation blanket (newer tanks usually have built-in insulation).
3. Install Low-Flow Fixtures
By reducing hot water demand at the point of use, you’ll decrease the load on your water heating system. This can prolong the life of your equipment, lower the need for maintenance and replacement, and keep your operation from wasting a precious resource.
Low-flow faucets, pre-rinse spray valves, and showerheads can help reduce hot water use without compromising performance (in some cases, people prefer the higher water pressure as well).
For restaurants, you can upgrade to DOE-compliant pre-rinse spray valves with a flow rate of 1.1 GPM or lower. Hotels and gyms can use low-flow showerheads rated at 2.0 GPM or less. Even simply replacing older sink faucets with aerators in your office bathrooms or apartment kitchens can make a significant difference. The added bonus is that reducing your hot water consumption also lowers your sewer and water costs.
4. Upgrade to Smart Controls or Timers
Many types of commercial equipment these days feature smart controls, timers, and automated features that can help you optimize your heating schedule based on demand patterns. Timers can shut off unnecessary appliances and equipment during non-business hours (or at seasonal times when demand is lower).
Advanced control options can help you monitor water usage, schedule pre-heating during off-peak hours, and even integrate with building management systems. This option may not be suitable for all businesses, but it can be a beneficial choice for companies with predictable usage patterns, such as schools, gyms, and offices.
5. Maintain Equipment Regularly
Like all your commercial equipment, your commercial water heater requires proper maintenance. By following a set maintenance routine, you’ll ensure that everything is running at peak performance. Water heating experts can also help you notice inefficiencies long before they become major problems.
If you have a maintenance plan with your commercial water heating company, such as Reliable Water Services, we’ll assist you with routine key maintenance tasks, including checking for and replacing worn anode rods, testing pressure relief valves, and flushing sediment buildup from tanks. Even minor concerns, such as sediment buildup, can cause the unit to work harder, resulting in increased energy use and wear and tear on your water heater.
6. Address Leaks and Drips Promptly
A little slow drip might seem like no big deal. But leaking hot water literally means sending money down the drain. According to the EPA, a single hot water faucet that drips once per second will waste an astounding 3,000 gallons per year!
Check your leaky faucets, especially in kitchens, locker rooms, and bathroom sinks. Watch for hidden leaks in wall cavities or pipe chases. Also, keep an eye on your water bills for any sudden increases, which can be an indication of a leak somewhere in the system that you may not know even exists. Most importantly, if you notice signs of a leak from your commercial water heater, contact your technician right away! A failing relief valve or another issue can cause water damage and signal larger problems to come. Fixing leaks is well worth it.
7. Monitor Usage and Benchmark Performance
It’s challenging to improve things if you don’t measure performance. That means it’s a good idea to review your water and energy bills regularly and look for any unexpected fluctuations and changes.
By monitoring your water heater’s energy use, you’ll quickly notice spikes and inefficiencies. You’ll also be able to track ROI on any energy-saving improvements, and it can help you monitor and measure the effectiveness of future upgrades.
8. Upgrade When the Time is Right
If you own your commercial water heater, you may think it’s better to let it run until it reaches the end of the line. Unfortunately, inefficiencies can slowly erode your costs over time and eventually lead to a sudden and catastrophic water heater failure.
If you have a standard efficiency gas water heater that’s chimney vented, that means your water heater is only about 80-86% efficient and there’s opportunity for improvement by switching to a high-efficiency condensing model, which are typically 95-98% efficient. In fact, the DOE has recently issued new regulations on commercial gas water heaters, and as of October 2026 high-efficiency condensing gas water heaters will be the only type to be manufactured.
Switching from a standard water heater to a high efficiency water heater will require all new venting and lead to longer installation times, due to vast differences in how they are built and function. But with the new DOE regulations, the transition will eventually be required for everyone that hasn’t yet made the switch. And it’ll be better to make that choice proactively, so you can properly plan for the longer installation times and costs, rather than waiting for an emergency breakdown that forces the transition when you aren’t prepared.
Rest easy with a commercial water heater leasing plan from Reliable Water Services. We’ll help ensure that your water heater operates efficiently and reliably at all times. And, we are fully prepared to help you upgrade your equipment to a high-efficiency water heater whenever you’re ready. Our rental plans and term leases are flexible, so we can easily customize your plan to finance the higher installation costs of an HE equipment upgrade and lower your rate once that extra portion is paid off. Renting a water heater over time is a smart idea for many businesses because it’s an affordable option that allows you to get the water you need NOW without having to make a significant upfront investment. You can take the worry off your plate!
In the meantime, these smaller water heater changes can reduce your environmental impact, make your operations more efficient, and help your budget go further.
Saving energy with your commercial water heating system doesn’t require an overhaul or a big investment in a fancy new system. You can start with a few practical steps to help your business tighten up efficiency and keep costs low. Reliable Water Services is always here to help. We offer 24/7 support for your commercial water heater needs. We’ll help make sure that your hot water is steadily flowing for all customers, clients, or patrons! Contact us today to learn more.