It is probably best to first describe the differences between water heaters. Water heating can be provided by electric, fuel oil, natural gas or solar heat panels. Electric heaters are the least costly to buy, but use hydro and are slow to recover the temperature. Oil fired water heaters use an oil burner almost identical to an oil furnace burner and have to be exhausted through a chimney of "Class A" rating (clay tile and brick exterior or brick chimney with a stainless steel liner). You will never run out of hot water with an oil fired burner as long as you have oil in the tank and electricity to power the burner. Home heating oil for water heaters is the same as the furnace uses, but is still costly to operate. Oil heating is less and less popular in urban centers due to the lower cost of natural gas. Water heating with natural gas can be in many forms. The conventional natural draft model that utilizes a double walled "Class B" chimney up through the roof is still popular. This style of heater uses no electricity and is therefore the best to have if there is a power outage. One step above the standard gas water heater is the power vented heater. Very simply this model uses a small electric blower mounted on the top of the tank to exhaust the products of combustion from burningthe natural gas. This model has a higher efficiency and can be vented out a side wall using the approved plastic venting called "System 636". This unit does require a small amount of electricity to operate the blower and light the pilot burner each time the temperature of the water drops below set point. The heater requires a 120 volt outlet the same as all the others in a home and you can save more money by putting the receptacle on a timer to heat the water only for the normal periods that it is required. One step above the power vented heater is the high efficiency, condensing style of heater that is up around 96% efficient. This looks very similar to the standard and power vented tanks and is vented with either "system 636" plastic or stainless steel vent piping. The high efficiency units are available in a wide variety of sizes and require a drain for the condensate from the flue gases. The last model of water heater is the "Tankless Boiler". They are tankless in the fact that they do not require a storage tank like the previously mentioned units, yet most tankless boilers incorporate a storage tank... so why are they called tankless? They do not "boil" the water so why are they called a boiler? The concept behind the tankless boiler is that the water is heated at the moment that hot water is required. Incoming cold water is heated in one pass through the boiler en route to your faucets. These units are quite compact in size and can use the similar volume of gas that your furnace would use in order to produce the rapid rise in water temperature as it is called for. There are many problems that are starting to show with this style of water heating. The initial cost to install is high, the maintenance costs are high, the parts are expensive (if you can even find parts for the make you purchased) and in most cases will incorporate a storage tank of equal size to a conventional tank so there is no space savings. This writer will wait a few more years before purchasing a tankless hot water boiler for the above reasons, but more specifically to see which manufacturers' survive the glut of unit makes on the market. It is typical for one of these units to supply hot water through a separate heat exchanger for floor warming systems. These units can be exhaust vented out a side wall using plastic "System 636" or stainless steel venting. There is also a question of how long the high tech units will last due to various levels of water hardness throughout the province and with a hefty price tag, there could be some very irate customers in a few years. The gas company is getting out of the rental tank business meaning customers will have to come up with the cash or take out a loan when it comes time to replace.
I almost forgot to mention solar water heating, probably because the cost for manufactured panel and the installation costs make this quite a joke at least for those in the Ontario region where we have 6 months of winter, 4 months of spring and fall and only 2 of summer where the sun light is both intense enough and for a long enough period of time to heat the water. The system is also as unsightly as the neighbour with a pool that coils up 100 feet of hoses on his roof to heat his pool. The water has to be pumped using electricity and one leak can empty a pool over-night. With proper panels, a pump, heat exchanger, temperature controls and glycol are needed to operate the system year round.