Hybrid models, as the name suggests, strive to combine the best of tank and tankless water heaters. They do this by employing two modes of operation, one for normal usage and one for high demand. During normal operation, the hybrid heater maintains a small tank of hot water like a tank model. For times of high demand, the hybrid also includes a heating coil to produce hot water on demand. This hybrid adaptability allows the hybrid to operate at two to three times the efficiency of a tank model. Home efficiency enthusiasts in New England or Minnesota might be disappointed, however, because hybrid units are especially suited to warm climates, and will lose their efficiency quickly when asked to perform in cold weather.
Before you decide which type of heater is right for you, check your local utility rates. If electricity is significantly more expensive than gas in your area, that is another consideration to take into account when you calculate the savings an electric water heater might (or might not) give you, depending on where you live.
