The energy-efficiency of a water heater is measured by its Energy Factor (EF).
In the USA, new water heaters are required to have the yellow Energy Guide label.
In Europe, Australia and New Zealand there is also new standards of water heating efficiency and the prospect of future energy labels.
The Energy Factor (EF) measures the percentage of energy that is turned into hot water by the heater.
The higher the percentage, the lower the energy waste… A high Energy Factor (90% or more) means a small percentage of energy waste during combustion or through the tank (tank-storage models) and the pilot light.
High Energy Factors (EF)
Buying a 90% EF gas water heater instead of a 60% unit, provides energy savings of 30%.
But buying a common electric water heater with a very high EF (90%+) will not provide low energy bills: electricity prices are too high, compared to gas.
In the US, modern water heaters are legally required to have at least a 59% (natural gas and oil) or a 90% Energy Factor (electric water heaters), but the best available water heaters have higher EFs: 98% in condensing gas water heaters.
When buying, choose a water heater with a high EF, for energy savings.
Other factors that also matter for energy-efficiency
However, be cautious with the meaning of the EF and the use of the Energy Saver label.
In the US, part of the water heaters using the label have a relatively low EF. On the other hand, the high EF of electric water heaters only means that most or all of the electricity is transformed into heat. Nothing more. See: Gas vs. Electric Water Heaters.
And most of all, do not forget that there are other factors that are as important as the EF.
Factors like the design of water lines and pipe insulation, or small improvements involving the flow-rate of the faucets and shower heads, can provide huge energy and water savings.