Pumped to be hot, hot, hot

A Bangor company is making a high-efficiency heat pump designed
to work in cold climates.

By TUX TURKEL,
Staff Writer November 25, 2007

BANGOR -– A headline last year on the cover of Architectural
Record magazine posed this provocative question: "Can a new
kind of heat pump change the world?"

The answer is being formulated now in a small warehouse
here.

This is the headquarters of Hallowell International. The two-
year-old company makes a combined heating and cooling
system that uses patented technology to improve the cold-
weather efficiency of the basic heat pump.

Electric heat pumps extract warmth from air or water and
transfer it in order to cool or heat living space. They're the
dominate heating and cooling source in the Southeast.

But heat pumps are rare in Maine, where eight in 10 homes
burn oil. One reason: Conventional air-source models don't
work well when the temperature drops below freezing.

If somebody could design and sell a high-efficiency heat
pump that keeps a home comfy at minus 30 degrees for half the
price of heating oil, well, maybe that could change the world.
Especially a world reeling from high energy costs and the
growing impact of climate change.

"It's a pretty bold statement," said Duane Hallowell, the
founder and president of Hallowell International, reacting to the
magazine headline. "But at the same time, yeah, it should be
our mission."

The new heat pump being manufactured and sold by
Hallowell has been 12 years in the making. After one false start,
the product appears ready for prime time.

The company has lined up 2,000 dealers in 35 states and all
Canadian provinces.

It has sold roughly 2,400 units this year and installed 1,000
of them.

It has five related products under development for roll-outs
in 2008.

Also next year, the company expects to expand into a
refurbished mill in Old Town to produce a commerical-size unit.

Hallowell won't discuss finances at the privately held
company. But he said his five partners and 50 investors have the
resources to grow and diversify.

Challenges remain. Hallowell International doesn't have the
brand recognition of the big dogs, like Carrier and Lennox. The
unit's not inexpensive, either; installation runs $8,000 to
$12,000, roughly 20 percent more than a conventional heating
and cooling system.

And like any startup with a hot new thing, Hallowell could
implode if it doesn't have the management oversight to control
manufacturing and installation quality.

That said, maybe timing and technology finally have
intersected to put a Maine-made heat pump on a world map.

The technology being sold today by Hallowell International
was formerly called the Cold Climate Heat Pump. It recently was
renamed the Acadia Combined Heating and Cooling System.

The technology was developed in 1995 by David Shaw, a
former compressor designer at Carrier Corp. in Connecticut.
Shaw was inspired to design a low-temperature heat pump after
getting a high electric bill in his condo, which was heated by a
conventional pump.

Between 2002 and 2005, a subsidiary of Nyle Corp., a
heating and cooling technology firm located in Brewer, licensed
the rights to Shaw's patent and produced more than 150 units.
The product never really took off, however. News reports
attributed the failure in part to installation and manufacturing
problems.

Hallowell, a Bangor native and engineer, then purchased the
patent from Shaw, who currently serves as the company's chief
technology officer.

Hallowell worked with state and local economic
development officials to lease a
city-owned warehouse.

He won a $200,000 loan from the city, to pay rent and buy
equipment. His loan agreement requires the company to create
20 jobs this year and 50 next year. The work force has already
reached 26, Hallowell said, with manufacturing wages topping
$14 an hour.

Hallowell has spent a lot of time testing the unit, receiving
industry certifications and setting up a distributor network.

The company also attends trade shows and courts the
industry media. Earlier this month, Duane Hallowell was in New
York talking to home magazines and meeting with builders and
condo associations.

The Acadia has caught the attention of The Air
Conditioning, Heating and Refrigeration News. The Acadia won a
dealer design award sponsored by the magazine.

Mike Murphy, the magazine's editor in chief, said the
market for heat pumps is growing fast, up from 5 percent in the
1980s to nearly 30 percent of all combined heating and cooling
units sold today.

Hallowell's product, Murphy said, must carve out a niche in
places where heat pumps are common, like the Southeast, and
gain market share in the Northeast, where homeowners are
shifting away from oil heat.

It also must compete in cold climates with so-called ground
source or geothermal heat pumps, which are efficient but
require drilling or underground loops.

"There are a lot of heat pumps being sold," he said. "It's
going to take something to grab market share from the big
players."

The Acadia's top markets now include Canada, which has
plenty of homes with expensive electric heat, the Middle Atlantic
states, where oil and natural gas costs are rising, and the Pacific
Northwest, which has limited natural gas distribution.

The unit works well in cold weather, according to Jim
Chaters, national sales representative at Mits Air Conditioning
Inc. in Mississauga, Ontario. It's generating interest in
Manitoba, where winters are severe.

Chaters has 27 years experience in heating and cooling, and
is promoting Hallowell in Canada. Electric resistance heat is
common in Canada, Chaters said, but builders are looking for
cheaper alternatives.

The Acadia also is drawing interest from green builders.
Two low-energy subdivisions going up in the Ottawa area will
use the Acadia because its high efficiency will allow contractors
to reduce wall and window insulation levels and still meet green
building standards.

The technology is sound and easy to maintain, Chaters said.
The major challenge for Hallowell is to make sure it expands
through a well-trained dealer network, so installations are done
correctly.

"We're very excited," he said. "It has a huge potential, if it's
handled properly."

The Acadia is likely to generate the most interest in areas
where homes need both heating and air conditioning. But
savings on heating bills alone can make the unit cost-effective,
according to an online calculator on Hallowell's Web site.

For instance, a 2,000-square-foot home in Portland that
costs $2,724 a year to heat with oil could be warmed for $1,393
with the Acadia, roughly half the price. Calculators also are
available to compare propane, electric heat, conventional heat
pumps and geothermal systems.

Jared Ashley considered a geothermal system for his new
2,400-square-foot Cape that he built last year in Levant, west of
Bangor. But he heard about the Hallowell unit and had one
installed, for roughly $10,000. Operation is quiet and the duct
temperature, while not hot like an oil-fired furnace, is steady
and comfortable, he said. The company periodically monitors his
unit to track real-world conditions.

Inside Hallowell's 90,000- square-foot factory, engineers
monitor performance in insulated chambers where the
temperature is kept well below zero.

On the factory floor last week, workers were welding
compressors onto the unit bodies. Further down the assembly
line, the bodies were mounted in cabinets and wired with control
panels. The crew can assemble 20 or so units a day.

That output isn't meeting demand. But standing last week
beside 75 units boxed for shipping, Duane Hallowell said he had
to balance growth with the need to maintain quality control.

It's an interesting challenge for a small company with a hot
product.

When the Bangor Daily News covered the Acadia's official
product launch last month, local residents came to the factory
and tried to buy units off the assembly line.

Staff writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

Copyright © 2007 Blethen Maine Newspapers