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DesignBuilder is an EnergyPlus interface, so for calculation questions like this it's usually best to consult the EnergyPlus documentation, specifically the Engineering Reference. For water heaters, there are many components to the energy balance:

• heat added by heating element ("Water Systems" end use that you're focusing on)
• heat added due to on/off cycling parasitic loads
• heat added OR lost to air surrounding tank (aka ambient)
• heat added OR lost to water connections in & out of tank ("use side" going to DHW draws or "source side" if hot water provided to tank by solar thermal collectors or something similar)