The American Recovery and Reinvestment Act of 2009 (the Stimulus Bill) increased tax credits available to homeowners who make qualified energy efficient improvements to their existing primary residences. Homeowners thinking about installing new HVAC or hot water equipment should consider the benefits qualifying equipment would provide at tax time. Not only can these credits lower your tax liability, they can also reduce your energy costs by up to 40% and provide for a cleaner environment.

Homeowners who install qualified furnaces, boilers, heat pumps, central air conditioners, and hot water heaters in 2009 or 2010 may qualify for a tax credit equal to 30% of the installed costs, up to $1500. A list of equipment that qualifies can be found here. Since manufacturers are always changing their product lines, check with your contractor about qualifying equipment.

Advancements in HVAC technology, energy efficiency, and performance in the last ten years means that the equipment you buy today can pay for itself in just a few years.

It is important to note that the installed costs for HVAC and hot water equipment include equipment and labor.

Homeowners who install qualified renewable energy efficient improvements, such as geothermal heat pumps, wind and solar energy systems, and fuel cell technologies to existing or new homes qualify for a special tax credit equal to 30% of the installed costs with no dollar limits. This tax credit is available for the years 2009-2016. These credits do not count against the $1500 tax credit limits.

Qualified improvements to insulation, roofing, windows and door are also eligible for the tax credit. However, homeowner can only claim a maximum of $1500 for all qualified improvements made in 2009 or 2010.

Selecting the fuel and heating system best suited for your needs depends on the following factors:

• The cost and availability of the fuel or energy source
• The type of appliance used to convert that fuel to heat and how the heat is distributed in your house
• The cost to purchase, install, and maintain the heating appliance
• The heating appliance’s and heat delivery system’s efficiency

The environmental impacts associated with the heating fuel.

Fuel Availability

The simple view of heating fuels is that most homeowners are relatively limited in their options for heating fuels. In the Northeast, the choices are largely fuel oil or electricity, although natural gas is becoming available to more homes. For people in rural areas, heating fuels may be limited to propane and wood. People in most of the rest of the country have natural gas and electricity as their main choices.

In reality, the situation is more complex than that. First of all, solar energy is available throughout the country, and new homes in cold or moderate climates should be designed to take advantage of passive solar heating. Active solar heating systems can be used as a supplemental heating source in new or existing homes and are compatible with most heating and systems. Homeowners can use either solar air heating devices for preheating of ventilation air or solar water heating devices to supplement hot water heating systems. Solar energy can also be used to boost the performance of heat pumps, and an absorption heat pump will actually allow you to power an air conditioning system with solar energy.

In addition, pellet fuels—generally made from recycled wood waste—are available nationwide. These fuels may be available at competitive prices. Wood is also available in most parts of the country, although of course it is most cost-effective if you can harvest it for free (note that even “free” firewood requires expenses for hauling it, so it may be more expensive than you think). Propane is also available throughout the country.

Fuel Costs

One somewhat simple way to evaluate heating options is to compare the cost of the fuel. To do that, you have to know the energy content of the fuel and the efficiency by which it is converted to useful heat.

Fuels are measured in physical units, such as gallons of oil or propane, cubic feet of natural gas, or kilowatt hours of electricity (kWh). They are also measured by heat content. In the United States, the most commonly used value for expressing the energy value or heat content of a fuel is the British thermal unit (Btu). One Btu is the amount of energy needed to raise the temperature of one pound of water 1°F, when water is at about 39°F. One “therm” is 100,000 Btu.
Environmental and Efficiency Considerations

In addition to cost, you might consider the environmental impact of your heating fuel. You probably generate more greenhouse gases by heating and cooling your home than by any other activity, including driving.

Electricity seems like a clean energy source, but most electricity in the United States is generated by burning coal, which emits sulfur dioxide, nitrous oxides, particulates, and greenhouse gases. Some electricity is generated from natural gas, which burns cleaner, but at least half of the energy is lost in converting it to electricity and delivering it to your home. On the other hand, electricity is used to run heat pumps, which have the benefit of producing more energy than they consume. An electric heat pump system can balance out the efficiency losses at the power plant by using the electricity to draw energy from the outside environment.

Burning natural gas, oil, propane, wood, or pellets in your home with a high-efficiency furnace or boiler can be a very efficient way to deliver heat to your home.

Of course, the cleanest fuel for heating (and possibly cooling) your home is solar energy, which produces no pollution at all. In most homes, solar energy will merely supplement the main heating and cooling source, although the Department of Energy is building homes that aim to consume net zero energy over the course of a year.

Choosing a Heating and Cooling System

When choosing a heating and cooling system, there is no one answer; it’s largely a personal choice. For existing systems, your choices are pretty much set by the limitations of replacing the system with something significantly different. But for a new home, if your building contractor doesn’t impose limitations, the choices are wide open.

Choosing between systems depends in part on your fuel options, but also on your preferences. Here are some questions you might consider:

• Do you want a central air conditioning system? If so, are any heat pump options—particularly geothermal heat pumps—practical for your home?
• If you don’t want central air conditioning, could a baseboard hot water system or a radiant heating system meet your needs?
• If you need to cool your home but don’t want a central air conditioning system, could a room air conditioner, an evaporative cooler, or a ductless mini-split system meet your needs?
• Do you want to make use of solar energy to heat or cool your home?

Answering these questions, and exploring the information in the heating, cooling, and heat pump sections of this Web site, should lead you to an answer.

Taking some time up front to learn more about air conditioning and heating will save you time, frustration, and money when you choose a local company to repair or replace your HVAC system. When buying a new air conditioning and heating system, the contractor you select can affect on your satisfaction more than the brand of equipment you choose. Choosing a contractor when you have adequate time to do so systematically gives the best results—much better than picking one out of the phone book to respond to a heating or cooling emergency.

(1) Licensed, insured, longevity, and physical address
State or other required licenses. Make sure the HVAC contractor’s license is current, and see if the governing agency publishes a history of disciplinary actions or complaints you can see.

When considering a HVAC contractor, ask to see recent verification that they carry general liability to protect your property as well as worker’s compensation insurance on their employees. A small number of states (Texas, for example) do not require all employers to carry worker’s comp. Lack of adequate insurance could be a major headache for you if anyone gets hurt at your property.

Before you meet with potential contractors, you should check with your home/building insurance agent to ask if there are any other insurance considerations for the type of work you are considering.

Be sure to find out how long the contractor has been operating in the same city under the same name, and if the company has any additional operating names. Longer, of course, is better. The contractor should be provide a physical address, or some way to contact them other than a mobile phone number.

(2) Qualified, experienced And up-to-date
As heating and air equipment increases in efficiency and features, it gets more complex and requires better technicians. Select a HVAC contractor whose technicians are certified and have hands-on experience. Due to rapid advances in the industry, technician updates on equipment are essential. Four organizations that provide technical certifications and/or training are:

- HVAC Excellence
- NATE – North American Technician Excellence
- RSES – Refrigeration Service Engineers Society
- UA Star

Professional associations are another good way to screen for high quality local heating and A/C service companies. This can have a big influence on the caliber of technician that arrives at your home or business, how well your system works, and your overall experience. The three major professional HVAC associations include:

ACCA – Air Conditioning Contractors of America
ASHRAE – American Society of Heating, Refrigerating and Air-Conditioning Engineers
RSES – Refrigeration Service Engineers Society

(3) Comfortable to you
Ideally, the HVAC contractor you choose will install, maintain and repair your heating and air conditioning system for many years. You should pick one that has the kind of employees you will feel comfortable having in your home.

(4) Easy to reach by telephone
The local air conditioning and heating company you rely on should be easy to reach by telephone. They should also have a reliable system for reaching them after regular office hours, on weekends and holidays. Although not needed very often, when you do need emergency heating or cooling service, it helps to have it available from a company with whom you are already familiar.

(5) Relying on referrals
Generally regarding referrals, it’s best to get a consensus or have a selection process of your own. Why? If you rely on the experience of one neighbor, this may not be enough data. Although well intentioned, your neighbor may have a different situation in their home or different selection criteria than you do. If a lot of people recommend the same company, that is usually a very good sign.

Most HVAC contractors can provide a list of recent references from satisfied customers. If not, then you should cross them off your list and keep looking. Having knowledge of any unresolved complaints also provides a useful measure of contractor reliability. For general business performance, the Better Business Bureau provides useful information on both member and non-member companies. On their website, they provide a quick way to search a company’s basic history and complaints-resolved and un-resolved–using just the telephone number or the name of the business.