I have been pondering over the hook up of the samething you have just put on this forum. Now I can finish my incubater just in time for lock down. The water heater thermostat says 240 volts thermostat lower, time to put it all together so thank you for posting pictures, it makes it much easier for us grandmas to understand.
On thing to note if you use a water heater thermostat... Inside the water heater thermostat is a mini version of the traditional 'wafer' thermostats commonly used in incubators, inside being the biggest drawback... If you note the back of the water heater thermostat is metal, this metal has to transfer the heat to the wafer inside the housing, so it should be mounted with that metal exposed not up against the side of the incubator and a fan blowing across the thermostat will help drastically...
This might not be the best view but you can see how I mounted the thermostat in this design of mine, it's spaced off the top of the heater box by about 1" thus air can flow all around it and the fan (behind green screen) on the other side of the box makes sure that air is always flowing over it..
The metal housing combined with the fan prevents 'hot' spots...
I also drilled some very strategic holes in the housing of the water heater thermostat to allow heat to more readily enter and contact the wafer inside... I'll try and find the video that shows were these holes should be located and link it with an edit to this post...
**EDIT here is the video of where to drill some additional holes in the thermostat... Take care when drilling as to not destroy the unit...
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