A water heating apparatus including a tank divided into first and second chambers, wherein water in the first and second chambers has first and second temperatures, respectively, a first outlet for supplying water from the first chamber, a first thermostat to measure the first temperature, a second thermostat to measure the second temperature, means for heating water in the second chamber, a pump having a pump inlet in fluid communication with the second chamber and a pump outlet in fluid communication with the first chamber, and a controller configured to initiate pumping of water from the second chamber to the first chamber when the first temperature is below a predetermined first value. The controller is also configured to initiate heating of water in the second chamber when the second temperature is below a predetermined second value, the second value being greater than the first value.