If it is a newer water heater (under 5 years old), they come insulated well (on the inside). I would insulate the hot water pipe exiting the unit with pipe insulation.
Insulate the pipes as stated before, not the water heater itself. (By "pipes" I really actually just mean the hot water one coming from the heater itself). Use foil wrapping. Also do the same on your air ducts if you have a forced air furnace, as it does indeed make them much more efficient if the basement is near freezing temperature as it is often times here in Wisconsin. Do not insulate the cold air returns, however.
If it is a newer water heater (under 5 years old), they come insulated well (on the inside). I would insulate the hot water pipe exiting the unit with pipe insulation.
Insulate the pipes as stated before, not the water heater itself. (By "pipes" I really actually just mean the hot water one coming from the heater itself). Use foil wrapping. Also do the same on your air ducts if you have a forced air furnace, as it does indeed make them much more efficient if the basement is near freezing temperature as it is often times here in Wisconsin. Do not insulate the cold air returns, however.
Awesome Jasons & digital_precision! Thanks for the info!
[addsig]