Because most water heater tanks are made of steel coated with a thin layer of glass, the lining will eventually crack and begin to rust. To head off corrosion a metal "anode rod" is used to increase the life of the tank. The anode rod is a magnesium or aluminum rod that encapsulates a steel core. The rod is screwed into the top of the tank and suspended in the water. An electrochemical process causes the exposed steel of the rod to react with the corrosive elements in the water. By causing a primary corrosive reaction inside the tank the rod sacrifices itself to help protect the steel tank from corrosion, greatly extending it's life.
Inspecting and Replacing the Anode Rod
One of the most important plumbing maintenance task is to ensure the anode rod is still working inside the tank. The rod can be accessed from the top of the water heater by unscrewing it and sliding it out. If the rod has significantly eroded away it should be replaced with a new rod. Replacing a worn out rod is far less expensive then replacing an entire rusted out water heater!
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Also check the following blog post: What's the Purpose of a Water Heater Expansion Tank?
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