Your water heater’s EF, or Energy Factor rating, is the measurement of its overall energy efficiency. EF is calculated by comparing the total amount of energy it takes to heat your water with the unit’s daily energy consumption. The higher your water heater’s EF rating is, the lower your operating costs will usually be. While water heaters with a higher EF are generally more expensive to install, they are often a good investment because of the long-term savings they provide in utility bills. It is also worth mentioning that different water heaters will have different EFs depending on their fuel types. Tank heaters can be powered by natural gas, electricity, oil, propane, and solar power. Tankless models, for the most part, can only be powered by natural gas or electricity. Size is also a factor in EF, which is why smaller, tankless units – especially when used in smaller homes – tend to be so energy-efficient.