Traditional water heaters supply hot water when you want it but don’t typically represent the latest in energy efficiency. Tankless water heaters are more efficient, but readers we’ve polled have complained about inconsistent temperatures—particularly the so-called “cold-water sandwich” served when cold water lingers in the pipes.

At the 2012 International Builders’ Show last week, A.O. Smith announced a product that it claims combines the best features of both: the NEXT Hybrid. Priced at $1,800 (roughly $2,500 with installation), this gas-powered heater performs like a tankless unit, says the company. But with a 25-gallon buffer tank, it should resolve problems like minimum flow rates and cold-water sandwiches. It also helps the product deliver during peak periods when more than one appliance needs water.

Besides the NEXT Hybrid (centered in the photo), A. O. Smith showed other new products (left to right): the Voltex Hybrid Electric Heat Pump Water Heater, the Effex high-efficiency gas water heater, and the Cirrex solar water heater.

The last A.O. Smith product we tested was the hybrid-electric PHPT-80, roughly $2,250 installed, which produced annual savings of 59 percent over a conventional electric water heater. But that factored in a federal tax credit that expired last year for non-solar water heaters.