Buy a new energy-efficient water heater. While it may cost more initially than a standard water heater, the energy savings will continue during the lifetime of the appliance. Look for the ENERGY STAR® and EnergyGuide labels. You can find the ENERGY STAR label on efficient water heaters in the following categories: high efficiency gas non-condensing, gas condensing, electric heat pump, gas tankless, and solar.

Consider natural gas on-demand or tankless water heaters, which heat water directly without using a storage tank. Researchers have found energy savings can be up to 30% compared with a standard natural gas storage tank water heater.

Consider installing a drain-water waste heat recovery system. Drain-water, or greywater, heat recovery systems capture the energy from waste hot water-such as showers and dishwashers-to preheat cold water entering the water heater or going to other water fixtures. Energy savings vary depending on individual household usage.

Heat pump water heaters can be very cost effective in some areas. They typically use 50% less electricity to heat water than conventional electric water heaters. If your water heater is located in your basement, it will also provide dehumidification in the summer months. However, this technology can pose some installation challenges, so you should consult with an installer before you purchase one. For more information see energysavers.gov.