These integrated (also known as combination) water heaters take advantage of your home's space heating system to provide hot water. Two variations are known as tankless coil and indirect.
With these water heaters, particularly the indirect, you get benefits like quick hot-water recovery and the ability to provide enough water for high usage situations. They can save money in large applications, but they can also waste it in other situations.
Tankless coil water heaters
A heat exchanging coil is installed inside an existing furnace or boiler. When hot water is needed, cold water flows through the coil, where it is heated before being sent off to the tap. Like a tankless water heater, coil systems don't store water. The system works best in a cold climate, where heating systems are in use regularly. If that's the case, they can be somewhat efficient. But if they are continually starting up the furnace when it's not needed to provide heat, they can waste a lot of energy. These water heaters aren't usually recommended. Tankless coil systems are generally powered by electricity or gas.
Indirect water heaters
These require a storage tank but still tend to provide more efficiency when compared to the tankless coil. A non-freezing heat transfer fluid is circulated through the furnace and brings heat back to the water tank. With a boiler, hot water from the boiler travels through a coil to the water heater and back. Hot water stored by the tank allows the furnace to run less often. Indirect water heaters can also work well with radiant floor heating systems.
Indirect water heating systems can be powered by many means, including gas, electricity or solar energy. When they are combined with a high-efficiency boiler or furnace, they are one of the least expensive methods of water heating. They do suffer from standby losses, as conventional storage water heaters do. They are also an integral part of the heating system, meaning they're best installed during a complete construction project and not as a retrofit. With these systems, a professional will be able to tell you if you can benefit and what the costs will be, because they do cost somewhat more than most.