Abstract: An application for a method of heating water includes transferring the water from a water supply into an inner tank of the water heater which is held within an outer tank, transferring the water from the inner tank into an outer tank and then to supply a building with hot water. The water in the outer tank is heated with hot gasses, partially cooling to intermediate temperature gasses. The water in the inner tank is heated with the intermediate temperature gasses, further cooling the intermediate temperature gasses into cooler gasses that are then exhausted out of the water heater.

Abstract: An application for a method of heating water includes burning fuel to produce hot gases and heating a first mass of water with a first heat exchanger coupled to the hot gases. Heat remaining after the hot gases pass through the first heat exchanger is used by a second heat exchanger to heat a second mass of water. The first mass of water is partially isolated from the second mass of water and the first mass of water is contained substantially within the second mass of water. The second mass of water is colder than the first mass of water and, thereby, condenses more water vapor out of the hot gases.