Hot water on demand via LPG hot water heater. Runs directly off propane. Much more efficient than heat exchanger. Works on same principal as at home on demand LPG hot water heater. :-)
Tankless propane water heaters are not recommended for boats unless externally mounted. (Read manufacturers' instruction manuals) The other issue is tankless water heaters burn exorbitant amounts of NG or propane (Figure out the BTU's~ input to output) and are little better than generator powered electric versions. It's all in the math (or the fuel). In the end, diesel hot water heaters are the safest and most efficient.