Water tanks accumulate sediment, which naturally destroys their already-poor efficiency. By design, a water heater is nothing but a big kettle of water with a tube running up the middle of it that takes flue gases out. The only thing that slows down the flue gases is a baffle that is inside this heat exchange tube. In 2004, the N.A.E.C.A. (National Appliance Energy Conservation Act) Standards were finally mandated for water heaters. You have probably seen them on other appliances like air conditioners (going to 12 SEER this year) and furnaces (80% AFUE). The government had tried for a very long time to determine how they could apply these standards to water tanks, and finally determined the only way to do so is to thin the wall of the heat exchange tube. While this gained 1.5% efficiency, it meant all the manufacturers had to retool and the price went up over $100 in many places. It also meant that a thinner heat exchanger and jacket would mean less longevity. The predicted lifespan of new water tanks is 5-7 years! So, for an average yearly savings of under $10, you will spend more money on the new one and it will only last half as long as the old one did!
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