Uh-oh: you went to take a shower, and the water was ice cold! It’s time for a new water heater, but what do you need to know before you replace you old unit?

Residential water heaters are rated by energy factors (EFs), which indicate the amount of hot water produced for each unit of fuel. A higher EF indicates a more efficient water heater, so the higher the EF, the lower the electricity bills. Water heaters are the second-largest users of electricity in most homes, averaging 18 percent of electricity costs. Read on to learn about how different types of water heaters stack up.

Storage (traditional tank, 30-120 gallons)

• Pros: Lowest cost
• Cons: Large footprint (compared to tankless), relatively inefficient (Average EF of .95)

Tankless

• Pros: No footprint, great for small spaces, provides continuous flow of hot water
• Cons: Expensive, relatively inefficient (Average EF of .95), simultaneous use of hot water can tax system

Heat Pump

• Pros: Extremely efficient (Average EF of 2.4 to 3.39), can save homeowners $300 per year, cool air exhaust is a good dehumidifier, so perfect for damp basements or attics
• Cons: Large footprint, in heated living spaces, cold air exhaust requires more heating output

Solar

• Pros: Extremely efficient (50 percent more efficient than gas or electric), in sunny areas can pay for itself in three to five years
• Cons: Storage tank with energy source is required for cloudy days, large footprint, expensive initial outlay

Source:

http://www.energy.gov/articles/new-infographic-and-projects-keep-your-energy-bills-out-hot-water