More efficient types of heating, ventilation and air conditioning can save homeowners plenty on their heating and cooling bills. Government tax incentives that encourage homeowners to improve their energy efficiency also promise to fuel new product development by HVAC manufacturers.

The HVAC industry is expected to see growth again as tax credits from the American Recovery and Reinvestment Act help more consumers buy homes and update their systems. The green HVAC market should benefit in particular from federal and state support of more energy efficient homes and buildings, according to “HVAC, 2nd Edition—Green and Global,” the latest report from energy market research firm SBI Energy.

International manufacturers of HVAC devices seek to capitalize on the impending uptick in the market by designing high-efficiency equipment for sale in the U.S. that exceeds the 13 Seasonal Energy Efficiency Ratio minimum standard that was established by the Department of Energy in January 2006. Such equipment would qualify for the higher standards required to receive the tax credits available through the ARRA.

Recent developments in HVAC technologies have included geothermal heat pumps, under-floor air distribution and integrated photovoltaic systems. “Growth in the HVAC market will be driven primarily by the residential and non-residential construction markets,” says Shelley Carr, publisher of SBI Energy. “In addition, tax credits, new HVAC innovations, global expansion, and renewed investment in the replacement sector will revitalize the market.”

Thanks to the ARRA, homeowners can receive tax credits of up to 30 percent of the total cost of the installation of a geothermal HVAC system for geothermal heat pumps placed in service before Dec. 31, 2016. The DOE estimates that around 35,000 geothermal/ground-source heat pumps were installed in 2007, despite relatively high initial costs compared to standard heat pumps. By 2009, the number of geothermal/ground-source heat pump installations had reached an average of 90,264 per year.

According to the DOE, the average home spends about $1,900 annually on energy bills. The DOE estimates that homeowners can reduce their energy bills by up to 20 percent merely by replacing furnaces, boilers, central air conditioners and heat pumps with more efficient models.