Heating water accounts for almost 20 percent of the total heating costs in a normal home. The percentage is higher in an energy-efficient home (the same dollars, it's just a bigger piece cut from a smaller pie).
Almost all of the recommendations for improving heating systems for space heating apply for heating systems for hot water:
-- Increasing burner efficiency;
-- Tandem systems;
-- Grey water heat exchangers (hot waste water to cold fresh water), require careful installations for health reasons (not pollute the incoming fresh water) but have proved themselves simple and cost efficient.
-- In addition you can improve the insulation on old hot water tanks to retain the heat, which will same you money during months that you are not heating the house. In fact this can give you a double savings if you have air conditioning (you don't have to pay to cool the excess heat).