Tankless water heaters only heat water when it is needed. About 8% to 30% of the energy consumed by a standard water heater goes to keeping the water hot while it's not being used. New tankless systems heat the water instantly when you turn on the faucet, rather than keeping a tank full of hot water 24/7 whether you're using it or not. Tankless heaters run on either electricity or gas, just like regular heaters. They start out at about $300 for electric and $600 for gas.
There are two main brands of whole-house electric tankless water heaters: Stiebel Eltron and Powerstar. They come in various models, which are rated on the "gallons per minute" that they deliver.
The online store Low Energy Systems has a good selection of tankless water heaters, both electric and gas-powered. You can also find tankless water heaters reviewed on Amazon–this is one of the few places you'll find reviews from owners themselves.
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