BTU stands for British Thermal Unit. It's a measure of heat energy. One BTU is the amount of energy needed to raise the temperature of one pound of water by one degree Fahrenheit. In the context of water heaters, BTU rating indicates the heating capacity of the unit. So, for your Performance Plus 40 Gal. Short 9-Year 38,000 BTU Natural Gas Tank Water Heater, it means the heater can produce 38,000 BTUs of heat energy per hour to heat the water.