Did you know that heating and cooling account for about half of the average home's annual energy bills? That's why it's so important to carefully choose the heating and cooling equipment for your home. If your current system needs to be replaced, you have an opportunity to choose a new system that is far more efficient, and that will cut your energy bills. (But don't forget that even the most efficient equipment won't keep your comfortable if your home and its ductwork are not properly sealed and insulated.)

If you're looking for a remarkably efficient way to heat and cool your home, be sure to take a close look at geothermal systems. They use underground pipes and an environment friendly liquid to transfer heat between your home and yard, eliminating the need for a separate furnace and air conditioner. In the winter, they soak up warmer underground temperatures and bring them into you home. In summer, they take heat out of your home's air and transfer it into the ground.

Geothermal systems are several times more efficient than equipment like gas furnaces. So even though they may cost more to install, they typically pay for themselves through energy savings in just five to 10 years. There are few moving parts, so geothermal systems are more reliable and last longer than furnaces - and there's no noisy equipment in your yard. Some systems can even use excess heat from the compressor to warm your home's hot water tank.

Ratings to know

When you compare equipment, you'll see some ratings that may be unfamiliar. The two most important are HSPF and SEER.

The Heating Season Performance Factor (HSPF) identifies how efficiently a heat pump converts electricity into heat. It is important to consider this number, because you'll use your heating source for roughly half the year. The higher the number, the more efficient the system - HSPF ratings of 6, 7 or 8 are considered to be good.

The Seasonal Energy Efficiency Ratio (SEER) measures cooling efficiency in heat pumps and air conditioners. Here again, the higher the number, the more efficient the system. Today, SEER ratings above 12 are considered high.

Choosing and installer

Many people improving their homes want a certain brand of heating and cooling equipment. However, the brand is less important than making sure it has been properly sized for the home's needs, and installed to ensure the greatest comfort and efficiency.

Have your system installed by a North American Technician Excellence (NATE) or Refrigeration Service Engineers Society (RSES) certified installer and/or technician. Ask the contractor to perform a heat loss/heat gain calculation to verify that the equipment is properly sized. That's important, because an air conditioner or heat pump that is too large will cool the house, but won't remove the right amount of moisture. A furnace that is too big for the house will not operate at the highest efficiency, so it will actually cost you more to operate.

Keep your system in top performance by having both your heating and cooling equipment maintained annually, and changing filters as often as recommended.

Click here to view the Energy Star® guide to energy efficient heating and cooling