Eight models of Paloma tankless gas water heaters are certified as energy efficient appliances by the Department of Energy's Energy Star program. These water heaters have energy factor ratings between .92 and .94, depending on the specific model.
Tankless water heater designs primarily improve efficiency over older gas water heaters by only heating water on demand, rather than having a storage tank that must be heated all at once. Higher-capacity water heaters of this type are usually more efficient than lower-capacity units. This holds true for Paloma's high-efficiency water heaters, with models delivering 4.8 gallons of heated water per minute having higher energy factors than those delivering 3.8 gallons.