A water heater has a modular control system. The water heater comprises a tank, a heating element, a first controller, and a second controller. The heating element is coupled to the tank. The first controller is mounted on the tank and has a first communication port. The second controller has a second communication port communicatively coupled to the first communication port of the first controller. The first controller is configured to control the heating element in accordance with any desired algorithm in an absence of the second controller, and the second controller is configured to perform at least one function in addition to or in lieu of the first controller.