The water heater Energy Factor (EF) is a measure of the overall efficiency of the water heater. This is determined by comparing the energy in the heated water used daily to the total daily energy consumption of the water heater. The EF can be used to compare the energy efficiency of water heaters. Water heaters with higher EFs will have lower annual operating costs than comparable models with lower EFs. A higher EF signifies a more efficient model. Water heaters with high EF ratings may cost more initially, but save energy and money in the long run. Eventually, they will pay for themselves through a lifetime of energy savings.