Yes, a centralized location will reduce heat loss from plumbing pipes by reducing the length of pipe needed, thereby reducing the distance that the heated water has to travel. Moving the hot water heater to an interior space and installing insulation around the tank can also reduce heat loss. If you have a gas water heater, be certain that health and safety protocols for gas water heaters are followed if installed in interior spaces. For more information about water heater location and choices, read Water Heaters and Energy Conservation -- Choices, Choices! The U.S. Department of Energy also has more information regarding Water Heating and energy efficiency.
