kingdragonfly: Some people have mentioned heat pump hot water already, "HPHW"

HPHW will suck heat from wherever it is, and cause a tiny bit of condensation, so one that's outside can be an advantage; it won't make for a cold basement.

NZ Herald: Element's Guide: Heat Pump Water Heaters
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An average HPWH is three to four times more efficient than conventional electric water heaters.

Consider that 30% of the average power is dedicated to heating water, and do the maths.
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In a new build environment, the payback period can be one to three years for a family of four or more. An annual energy saving of $600 to $700 is readily achieved, and can increase by $200 to $300 per additional resident.

In a retrofit environment, where an existing tank needs to be replaced, or the hot water system is being upgraded to mains pressure, the marginal cost is about $800 to $1000, which can provide a payback of 18 months to two years.
...

how many house holds these days have more than 4?  not many. 

its really only good for large families or those who simply use a lot of hot water. for myself i did a rough work out that the unit would need to be replaced well before it paid for itself in savings.

some of the other problems is controlled hot water and looses due to being outside. not to bad if you need to have it outside anyway, cheaper heat to make up for increased losses.