Water heaters have become much more energy efficient over the past few years. In the past year, heaters have improved to an average of 95% efficiency. The amount of insulation around the tank has also doubled, adding to the energy savings. With all these new changes, also comes the catch; a larger heater. Your old water heater might be a few inches smaller in diameter and height than the new unit! This needs to be taken into consideration if the heater is located in a custom space or closet.