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Instant water heaters do NOT reduce the amount of energy needed to heat water. They reduce the STORAGE losses to pretty much zero. Know also that they do have some quirks; they do not work below a certain flow level; a trickle will be cold forever. They also have max flow rates ( at a given temp change ) above which they will produce warm instead of hot water . . . if you fill a tub; there is NO flow restrictor . . . if you have several sinks in use, wash is running, dishwasher etc . . . the instant heaters may or may not be able to keep up with the TOTAL flow at an acceptable temperature. Also know that they do use GREAT amounts of power ( electric OR gas ) when they are running as they are basically heating the water instantaneously . . . this can mean some pretty hefty wiring or perhaps a larger gas line to support the high demand when they are running. I've also heard that some are quite prone to mineral build-up over time; which eventually makes them perform poorly. Not sure how easily "serviceable" they are as compared to conventional water heaters if you need a part.

As far as environmental impact; geothermal will be your best bet . . . it's using the earth's heat as the source of heat for the water . . and some electricity to achieve that. Gas or electric heating means there's fossil fuels getting burned somewhere; either directly in your place, or somewhere else to create electricity. Oh yeah . . nukes . . . let's not bring that one up. Unless you're somewhere that has ( and will have ) cheap electricity; a strict electric tank will be more costly to operate.

The idea of getting much of your heat geothermally, and supplanting it with electric sounds like the best way to go to me. You can either buy a very well insulated tank; or a pretty good one and add a blanket to it for additional insulation. Believe Marathon makes some pretty well insulated, well made electric water heaters.

There's my two cents . . . . .

Bob

Thanks for your input!