I need to replace my gas water heater. Walter said the cheapest, most common improvement is increased tank insulation. Energy-efficient heaters typically use urethane foam instead of fiberglass. Several manufacturers offer water heaters with sealed combustion venting. These units vent combustion gases horizontally through a nearby wall, eliminating the need for a chimney.
Combustion air is brought in through the outer wall of the double-wall flue pipe.
Walter said this venting system saves energy because it does not constantly exhaust warm air like a chimney does. Sealed combustion water heaters are more often chosen for their safety than for energy savings. Because they have no connection with the air inside the home, they cannot backdraft or spill harmful pollutants like carbon monoxide into the air you breathe. They are an excellent choice for tightly built new homes. These energy-saving features are electronic ignition and power venting.