Hot water with less energy
This page discusses tankless water heaters and demand recirculation.
You may also be interested in the Solar Domestic Hot Water and Water
Conservation pages.
Tankless water heaters
Heating water can use an inordinate amount of energy, especially since much of that energy is used to store hot water that may not be used for hours. Tankless, or "on demand," water heaters save energy by heating water only when it's needed. Microtherm Incorporated says its Seisco system costs just $11 a year on standby heat, compared to $80 to $100 for a conventional gas water heater. Other manufacturers include Takagi Industries, Envirotech™ Systems, and S.E.T.S..
Keidel.com has a good article on the advantage and disadvantages of tankless water heaters, as well as a discussion of their efficiency and suggestions for choosing models and manufacturers. Here is their advantage/disadvantage list:
Advantages
Disadvantages
Other sources also indicate that hard water (which is really common around here) can cause deposits to build up inside the heater and significantly reduce it's efficiency, eventually clogging it up completely. If you choose an electric model (which has a much lower up front cost), you can literally watch your electric meter spin when it operates. I know this because at our last house we had one installed for a short time as a part of an experimental solar installation. I wouldn't suggest it unless you truly use it infrequently. BTW, the Keidel.com article also mentions that those nifty new showers with the multiple power jets and all the bells and whistles typically require their own LARGE dedicated water heater (100 gallon capacity). If that's not an absolutely crazy waste of water and energy, I don't know what it.
Demand recirculation hot water delivery systems
Ideally, I would have to say that we should all live in smaller houses, so that we have short plumbing runs, which in turn would lead to no need to wait for (or waste) hot water. The reality is (in our case), although we started with a much smaller footprint, in order to make everything wheelchair accessible the house got bigger, and we do have some long plumbing runs. We tried to install an natural convection recirculation loop, but that didn't work out due to a tempering valve required by our water heater (because it is a dual purpose unit also used for space heating). This tempering valve would also preclude out use of demand recirculation. You can read how I work around this on the Water Conservation page.
For those of you who are not stuck with a tempering valve, you may wish to consider demand recirculation of hot water. I prefer demand systems over timers or temperature sensor triggered pumps, because you're only recirculating water when you need it. If you got a system on a timer or temperature sensor and it's always pulling hot water whether you're using it or not, just on the off chance that you might need it, you're losing heat from the hot water sitting in the pipes plus you're using energy unnecessarily to run the pump. The heat loss from the pipes is not a big deal in the winter when you're heating your house anyway, but you certainly don't want to add to your cooling load in warm weather. However, there are some disadvantages to demand recirculation. Larger pipes may be required to accommodate higher flowrates, higher flowrates may cause corrosion/erosion issues, and systems that are retrofitted to circulate water from the hot to the cold lines may cause warm water to issue from the cold tap. Talk to your plumbing contractor to see what's best for your situation. There's a good article at Contractormag.com that discusses the different types of systems. Below are couple of options that we considered for our home.
Metlund® Hot Water D'MAND® System
At the push of a button, the Metlund® Hot Water D'MAND® System circulates the ambient temperature water in the hot water pipes (water that is normally lost down the drain) back to the water heater. This occurs up to 80% faster than just letting the water run down the drain—the usual scenario. Depending on the plumbing layout, the route and time can vary. The Metlund D'MAND System moves the water so rapidly, that hot water arrives at the fixtures before the heat is lost through the pipe.
RedyTemp installs at the farthest faucet from the water heater as shown by the below diagram. We know that if the water is hot at the bathroom sink in the diagram below, it will also be hot at the shower, kitchen sink, dish washer and washing machine. A state-of-the-art controller board utilizing an ultra-sensitive stainless steel water contacting temperature probe accurately monitors actual real time hot water temperature while simultaneously controlling pump cycling, integrated check-valves (also made of DuPont patented non-stick calcium-proof material) and stainless steel solenoid valve operations to maximize efficiency. Sensing that the water in the hot water line has lowered, a low-power maintenance-free, whisper quiet professional grade pump, pumps the cooled down water out of the hot water line, into the cold water line where it's finally returned back to the water heater. Upon sensing water temp equal to the owners desired �dialed-In� temperature, the pump stops. While some recirculation systems on the market require continuous pumping during scheduled-on periods. The RedyTemp conserves energy by cycling the pump on and off based on temperature to greatly increase the life of the pump as well as to preserve cold water comfort.
If you are not ready to try either of these options, make sure you choose an energy efficient standard heater when your's needs to be replaced. If you have an existing heater, make sure to do annual maintenance to keep it operating properly. Water Heaters and Energy Conservation- Choices, Choices! by Larry and Suzanne Weingarten discusses water heating options and suggested water heater maintenance. Installing a water heater timer is another option to reduce your water heating load, as is turning down the tank temperature.

Links
The Most Energy Efficient Water Heaters from the American Council for an Energy Efficient Economy - Next to heating or cooling, water heating is typically the largest energy user in the home. As homes have become more and more energy efficient during the past 20 years, the fraction of energy used for water heating has steadily increased. This chapter takes a look at the high-efficiency water heaters available and how you can reduce water heating costs with your present water heater.
9 Best
Practices for Choosing and Installing a Tankless Water Heater - from
GreenHomeGuide.com. Tips for estimating your load, selecting your
contractor and dealing with building codes, among other things.