We recently covered Tankless Water Heaters. A new product is the Hybrid Water Heater. Like ones from Eternal and GE.  Hybrids have 2 modes of operation. With low flows it has a fixed gas input rate from the preheated water, with higher water needs, it uses a flow sensor like a tankless.

It is much higher in efficiency than a regular water heater but hold less hot water, usually less than 10 gallons.  Tankless water heaters do not have the capacity to satisfy multiple water uses at the same time. Energy star standards are emerging for these new items. These units can be up to 50% more efficient.

These items are not cheap, they start around $1800 for a 180K BTU, 15GPM model.