Insulating Your Hot Water Pipes: A Simple Way to Cut Energy Bills
Hot water accounts for around 25% of the average Australian household energy bill. Pipe insulation and tank blankets are low-cost measures with fast payback.
Hot water is a significant energy cost in Australian homes — typically 20–30% of the household energy bill depending on household size and system type. Before upgrading to a heat pump hot water system, two simple and inexpensive interventions can meaningfully reduce waste from your existing system: pipe insulation and tank blankets.
Insulating Hot Water Pipes
Hot water pipes that run through unheated spaces — under-floor cavities, roof spaces, external walls — lose heat before water even reaches the tap. Insulating these pipes with foam pipe lagging raises the temperature of water arriving at the tap, meaning you can lower your system's set temperature slightly while still receiving hot water at the same temperature.
- Temperature at tap improves by 1–2°C, reducing total wait time for hot water
- Energy savings: 3–5% on annual water heating costs (DCCEEW estimates)
- Pipe lagging costs $2–$5 per metre and is a straightforward DIY task
- Priority areas: first 2–3 metres leaving the hot water unit, plus any pipes in uninsulated spaces
Water Heater Tank Blankets
Electric storage hot water systems lose heat through the tank walls continuously — a process called standby heat loss. A tank blanket wraps around the outside of the tank to slow this loss. The payback period is often under 12 months.
- Standby loss reduction: 20–40% according to Australian government energy efficiency data
- Annual savings: 7–16% on water heating costs
- Tank blankets cost $40–$80 from hardware stores
- Most effective for older tanks located in garages, carports or uninsulated roof spaces
Important: Australian regulations require electric storage hot water systems to be set at 60°C to prevent Legionella bacteria growth. Do not lower the set temperature below this. A mixing valve (tempering valve) at the tap delivers water at 50°C for safety while the tank maintains 60°C for hygiene.
When to Go Further
Pipe lagging and blankets are worthwhile for systems that are otherwise in good condition. If your electric storage hot water system is more than 10 years old, the economics of replacing it with a heat pump hot water system are increasingly compelling. Heat pump systems use 60–75% less electricity than resistance element systems and typically qualify for STC rebates and state-based incentives.
| Measure | Typical cost | Annual savings | Payback |
|---|---|---|---|
| Pipe lagging (5 m) | $15–$30 | $30–$60 | 6–12 months |
| Tank blanket | $40–$80 | $80–$150 | 6–12 months |
| Both combined | $55–$110 | $100–$200 | 6–12 months |
| Heat pump upgrade | $2,500–$4,500 (after rebates) | $400–$700 | 5–8 years |