What if you turned off your hot water heater and installed very small hot water heaters for each bathroom and the kitchen of your house, and then just heated up the water when you needed it? Water in a tea kettle doesn't take that long to boil, so I figure you could get water up to a decently hot temperature in a minute or so, depending on how much hot water you needed. I hear the Chinese do this, rather than wasting tons of energy with one huge hot water heater that's always on.
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