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This project completed a modeling evaluation of a hybrid gas water heater that combines a reduced capacity tankless unit with a downsized storage tank. This product would meet a significant market need by providing a higher efficiency gas water heater solution for retrofit applications while maintaining compatibility with the half-inch gas lines and standard B vents found in most homes. The TRNSYS simulation tool was used to model a base case 0.60 EF atmospheric gas storage water, a 0.82 EF non-condensing gas tankless water heater, an existing (high capacity) hybrid unit on the market, and an alternative hybrid unit with lower storage volume and reduced gas input requirements.