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Originally Posted by Ryland
even if it does retain most of it's heat there is no reason that it needs to come on after you used your hot water for the day, it would be like turning your tea kettle back on after you pour your tea, if you did that, even with a well insulated tea kettle people would say you were kind of dumb, so why have your water heater automatically come on after you've taken a shower and gone to work?
I have yet to hear of someone that hasn't seen a noticeable drop in there electric bill after installing a timer.
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Your analogy falls apart in that an electric water heater is more like a thermos than a teapot.
It takes a certain amount of energy to raise the water a degree ... 2.42 watts per gallon. If you have to raise it 10 degrees, it doesn't matter if the heater comes on ten times to raise it one degree, or if it comes on once to raise it ten degrees. You use the same energy to recover the 10 degrees of heat you lost.
If you are getting standby losses through the jacket and save money by turning it off for 8 hours, you should definitely take the other, cheaper measures anyway. No matter when you heat the water, the heat loss is still happening. There's a good chart with formulas and facts at this
PDF file link
Here's a quote from another website:
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Use a timer on older electric heaters. A $40 timer can automatically turn off an electric heater when you go to work, then back on right before you come home, off after you go to bed, and on again right before you get up. These don't save as much money as you'd expect, though. That's because a typical electric water heater only runs about three hours a day anyway, and modern energy-efficient water heaters run only 1.3 hours or so. Standby losses (how much heat the tank loses by just sitting there) aren't that great, especially for modern heaters. (In fact, if your heater was made after 1998, it's probably not worth using a timer at all.) And even with a timer you'll still have standby losses as soon as you leave for work and after the tank shuts off for the night. A timer for an old (pre-1998) heater will save about 25kWh/mo. for a family of two using 40 gallons a day with the heater off four to six hours a day, but only 14kWh/mo. for a family of four using 80 gallons a day. (Florida Extension Service) (See below about how to install a timer.)
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From
http://michaelbluejay.com/electricity/waterheaters.html
You pay for electricity by the kWh, so if you are paying .08 per kWh, your monthly savings with a newer heater is only 1.12 per month. A $40 timer has a payback of about 3 years, and much longer if you pay an electrician to put one in ($80 to $120 in my area).
There is a point where turning it off will save money even with a well insulated tank, but that shouldn't be within 8 hours. If your friends are saving money over that short a period of time they still have a great opportunity to save money (and energy) by insulating the tank and pipes.