Even in the rapidly expanding world of green-energy technology, an innovative idea can sometimes arrive on the scene slightly ahead of its time. Such was the case with the Acadia, a patented, highly efficient combined heating and cooling system developed by Bangor-based Hallowell International.

The technology was so advanced that it didn't fit any of the government's categories for energy tax credits through the federal stimulus act, which meant a big drop in business for Hallowell International. After a year of negotiating, company president and co-founder Duane Hallowell says the product is finally eligible this week for the credits. And Hallowell is ready to grow.

The Acadia is the first air-source heat pump system to be successfully engineered to work in cold climates such as Maine, says Hallowell. Not only can it operate efficiently in temperatures well below freezing, it uses no fossil fuels as backup, is easy to install, requires little maintenance and can save consumers as much as 70% on their domestic heating and cooling bills.

With the flip of a switch, Hallowell says, the Acadia converts to an efficient, eco-friendly central air conditioner.

Such attributes would seem to make the Acadia technology a shoo-in for energy tax credits aimed at stimulating consumer interest, especially in a region like the Northeast, where homeowners rely so heavily on No. 2 heating oil and where heat pumps, a staple in the South, are largely unknown.

Yet when the American Recovery and Reinvestment Act was launched in March 2009, the Maine-bred technology was simply too new to fit any of the federal government's established product categories and so did not qualify for rebates. The federal standards recognized only traditional air-source heat pumps that use two stages of compression, Hallowell says, whereas the Acadia is a revolutionary three-stage system. "The government never said we didn't meet the performance standards," Hallowell says. "It just didn't have any way to measure them, in our case."

To make matters worse, the stimulus package provided a 30%, no-cap tax credit for more expensive geothermal systems, which happen to be Hallowell's chief competition in the Northeast and other cold-weather markets.

"It wasn't just about us not getting the rebates, but it was the complete lack of government endorsement for innovation that bothered us," he says.

In 2008, when fuel oil prices soared to $5 a gallon, Hallowell International managed to grow 600%, increase its staff to nearly 40 employees and establish dealership arrangements in 38 states and Canada. The next year, suddenly ineligible for the tax credits that other competitors enjoyed, the company's sales fell by 50%, forcing it to cut nearly half its staff.

Hallowell decided it was time to take action, not only for the sake of his own small company's bottom line but for the other firms whose very existence was being threatened by federal standards not keeping pace with technological innovation.

Hallowell enlisted the help of Maine's congressional delegation, which appreciated the frustration of the home-grown entrepreneur and began working last March with the Department of Energy to develop new standards under which the Acadia technology could qualify for critical tax credits.

"I have to say the state of Maine really stepped up to the plate on this," says Hallowell. "And since then it's been a daily effort involving our law firm and the delegation in getting things accomplished."

In November, he says, the DOE issued the company a waiver that allowed it to begin testing its novel heat pump under new standards. This week, with the testing completed, Hallowell is happy to announce that the Acadia system is finally eligible for a $1,500 tax credit, plus any utility, state, municipal rebate, incentive and / or programs for air source heat pumps this year.

"It's been a struggle, but fortunately, based on our growth in 2008, we were strong enough to overcome the tough times of the past year and look forward to 2010," he says. "We sold 500 systems in 2007, 1,600 in 2008, 1,000 last year and we hope to sell 3,000 systems this year in the U.S. and Canada."

In the meantime, the new "boosted compression" technology is earning accolades as a welcomed alternative to fossil fuel-based heating and cooling systems. In April 2009, Hallowell International received the Maine Governor's Award for Business Excellence, administered by the Maine Department of Economic and Community Development.

Last July, the Acadia system was honored as one of 2009's Top 10 Green Building Products as chosen by the publication "Sustainable Industries." And this past January, the technology was named one of the 10 Best Green Tech Innovations by "E/The Environmental Magazine."

The military is also interested in the technology. McGuire/Fort Dix Air Force Base in New Jersey is in the process of installing 2,000 of the systems in its base housing.

"With the Acadia, consumers have an alternative to fossil fuels," Hallowell says. "Providing that option has been our objective from the beginning."