Indirect water heaters were not mentioned in the tax credit law, so they were not eligible for a tax credit. The only water heaters that were eligible for a tax credit are electric heat pump water heaters, gas, propane, or oil water heaters, or solar water heaters.
Indirect water heaters use your furnace or boiler to heat the water in its storage tank. More on indirect-water heaters.
Section 25C(d)(3)(A) an electric heat pump water heater which yields an energy factor of at least 2.0 in the standard Department of Energy test procedure,
Section 25C(d)(3)(A)(D) a natural gas, propane, or oil water heater which has an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent, and
Section 25D(1): The term "qualified solar water heating property expenditure" means an expenditure for property to heat water for use in a dwelling unit located in the United States and used as a residence by the taxpayer if at least half of the energy used by such property for such purpose is derived from the sun. Such term shall not include any facility with respect to which any qualified small wind energy property expenditure (as defined by subsection (d)(4) of section 25 D) is taken into account in determining the credit under such section.