An energy re-claimer is provided for preheating water prior to the water entering a conventional residential, commercial or industrial gas water heater. The energy re-claimer is mounted on top of the water heater between the draft diverter and the hot air flue. The energy re-claimer is preferably a double wall construction that is larger in diameter than the draft diverter and hot air flue in order to allow normal passage of hot air through the system; however, a single wall construction may also be used. Tap water enters a pipe inside the double wall construction and is heated prior to being directed through the water heater. The pipe may be constructed of a number of straight lengths connected by returns or may be in the form of a single straight section connected to a coil made of connected curving sections that surround the axis of the energy re-claimer. A condensation collector may be provided between the draft diverter and the energy re-claimer to collect any condensation that may form as a result of cooling gases and prevent the condensate from falling into the water heater where it could extinguish the flame.