When shopping around for a new water heater, consider factors such as: Size: You need a properly sized water heater to provide enough hot water and maximize efficiency. Energy efficiency: An efficient water heater will maximize your energy and cost savings. Costs: It helps to compare the annual operating expenses of various models before settling on one. Fuel type, availability, and cost: The energy source or fuel type you use for heating water will affect your unit's annual operating costs as well as its size and energy efficiency.