A heat exchanger having a helix coil incorporated into a stainless steel elongated variable diameter cylindrical housing and a radial direct-firing burner and a blower-driven hot flue gas to heat water. A buffer tank is incorporated within the lumen of the helix coil. At least one rope seal is disposed between adjacent coil loops of a portion of the helix coil for enhancing heat transfer to the helix coil. In one embodiment, the heat exchanger further comprises a Stirling engine comprised of a free piston having hot and cold ends that is disposed within the cavity taken up the buffer tank, wherein the hot end receives heat from the burner and the cold end is cooled by the incoming cold water line to form an electric power generator.