From the US Dept. of Energy
Types of Water Heaters
Keep in mind the different types of water heaters available before you purchase one:
Conventional storage water heaters
Offer a ready reservoir (storage tank) of hot water
Demand (tankless or instantaneous) water heaters
Heats water directly without the use of a storage tank
Heat pump water heaters
Moves heat from one place to another instead of generating heat directly for providing hot water
Solar water heaters
Uses the sun's heat to provide hot water
Tankless coil and indirect water heaters
Uses a home's space heating system to heat water
Selection Criteria
When choosing the best type and model of water heater for your home, you also need to consider the following:
Fuel type, availability and cost
The fuel type or energy source you use for water heating will not only affect the water heater's annual operation costs but also its size and energy efficiency.
Size
To provide your household with enough hot water and to maximize efficiency, you need a properly sized water heater.
Energy efficiency
To maximize your energy and cost savings, you want to know how energy efficient a water heater is before you purchase it.
Costs
Before you purchase a water heater, it's also a good idea to estimate its annual operating costs and compare those costs with other less or more energy-efficient models.
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