Propane hot water heaters have a higher recovery efficiency, a measure of the capacity to heat water quickly, than electric hot water heaters. A propane water heater needs less stored hot water than an electric one. In general, a homeowner can opt for a smaller tank if choosing propane.
A larger measure of a water heater's efficiency is the Energy Factor, which takes the recovery efficiency measurement into account. Higher Energy Factor ratings mean higher efficiency. The Energy Factor for propane water heaters ranges from .5 to .65, while the rating for electric water heaters is around .9. However, these ratings do not take into account the relative costs of propane and electricity.