Electricity is an efficient way to heat water.  In a well insulated hot water tank or cylinder it can be heated during off peak (cheap) periods and stored for use during the day.  Nowadays all hot water storage units have to meet Part L of the Building Regulations to ensure that all meet minimum standards of insulation.

Generally, an electric (or "direct") cylinder will have two immersion heaters fitted.  The lower one is placed near the bottom of the unit allowing the full contents of the vessel to be heated.  The upper immersion heater is used for energy top up if there has been a heavy demand between off peak heating periods.  That's why it is important to size the units correctly whilst trying to ensure that there is sufficient hot water for normal daily usage.

Mains pressure hot water can be supplied using electricity by either unvented units which hold a store of domestic hot water or thermal store which provide domestic hot water using a heat exchanger to draw energy from the store. 

Open vented cylinders can be fed from a remote tank, usually in the loft space, or an integrated cold section.  The latter "combination" tank is especially popular in dwellings where space is at a premium such as flats.

Consideration should be given to using green energy sources in an electric home such as solar thermal or Heat Pump technology or a mixture of both types.  It is also quite feasible to look at micro generation and this is covered in the Renewables section of the web site.