This blog was originally published March 2, 2023, and was updated May 7, 2026.

Key Takeaways

HVAC incentives are a tool for businesses to upgrade their equipment and improve how their systems operate. Technologies like Advanced Rooftop Controls (ARC), Energy Recovery Ventilation (ERV/HRV), and Ultraviolet Germicidal Irradiation (UVGI) each target a different layer of HVAC performance: controls, airflow efficiency, and indoor air quality.

What HVAC technologies deliver the highest operational and financial impact?

• ARC reduces energy waste by optimizing runtime, airflow, and system responsiveness
• ERV/HRV lowers heating and cooling loads by recovering energy from exhaust air
• UVGI improves indoor air quality while maintaining HVAC system efficiency
• Incentives reduce upfront costs and accelerate ROI for all three technologies.

What Are HVAC Incentives and Why Do They Matter?

HVAC incentives are utility-funded programs that offset the cost of energy-efficient upgrades. In 2026, these programs prioritize performance-based improvements, meaning technologies must demonstrate measurable energy savings or operational benefits.

This shift is driven by how commercial HVAC systems actually operate:

• Rooftop units (RTUs) serve ~60% of commercial floor space.
• They account for ~20% of total commercial building energy use.
• 73% still rely on basic or manual controls

That gap creates opportunities. Incentives now target technologies that improve runtime efficiency, airflow management, and system intelligence.

What Is ARC (Advanced Rooftop Controls), and Why Is It Incentivized?

What ARC Is

Advanced Rooftop Unit Controls (ARC) are digital control systems that upgrade how rooftop HVAC units operate. Instead of running on fixed schedules or maintaining constant fan operation, ARC systems use sensors, automation, and software to dynamically adjust performance.

What ARC Benefits Are

ARC delivers measurable efficiency and operational improvements:

• Reduces energy consumption by 20–50% through optimized runtime
• Eliminates unnecessary fan operation and over-ventilation
• Improves occupant comfort with more consistent temperature control
• Enables remote monitoring and centralized system management

ARC also supports Predictive Maintenance by analyzing performance data, including runtime patterns, temperature drift, and cycling behavior. This allows facilities to detect issues before equipment fails.

How ARC Impacts Building Operations

ARC transforms HVAC from a static system into an operational asset:

• Automates scheduling based on occupancy
• Adjusts ventilation using demand-controlled ventilation (DCV)
• Reduces manual intervention through remote access
• Integrates with Building Management Systems (BMS) using BACnet

More advanced systems can also connect to:

• OpenADR for automated demand response
• Grid-Interactive Efficient Buildings (GEB) strategies to reduce peak load

This allows facilities to manage energy use and participate in utility programs actively.

How Financial Incentives Apply to ARC

ARC receives the highest level of incentives because it delivers verifiable energy savings.

Utilities prioritize ARC because:

• Savings are consistent and measurable.
• Controls can be deployed across multiple sites.
• They reduce peak demand, not just total energy use.

In many regions, ARC incentives significantly reduce upfront costs, resulting in shorter payback periods than with traditional HVAC replacements.

What Is ERV/HRV, and Why Is It Incentivized?

What ERV and HRV Are

Energy Recovery Ventilation (ERV) and Heat Recovery Ventilation (HRV) systems improve HVAC efficiency by transferring energy between outgoing exhaust air and incoming fresh air.

• ERV transfers both heat and moisture
• HRV transfers heat only

These systems precondition incoming air before it enters the HVAC system.

What ERV/HRV Benefits Are

ERV and HRV systems improve efficiency by reducing the workload on HVAC equipment:

• Recover up to 80%+ of energy from exhaust air.
• Lower heating and cooling demand
• Improve indoor air quality by increasing the intake of fresh air.
• Reduce humidity issues in certain climates.

How ERV/HRV Impact Building Operations

ERV and HRV systems play a critical role in ventilation strategy:

• Maintain consistent indoor air quality in tightly sealed buildings.
• Reduce strain on HVAC systems during extreme temperatures.
• Support compliance with ventilation codes and standards

As buildings become more energy-efficient and airtight, ventilation becomes more important—and more energy-intensive without recovery systems.

How Financial Incentives Apply to ERV/HRV

ERV and HRV incentives are growing because they:

• Reduce total HVAC load (not just runtime)
• Improve energy efficiency in ventilation-heavy environments.
• Support indoor air quality initiatives.

Utilities often provide incentives for both electric and gas savings, especially in regions with extreme climates or strict ventilation requirements.

What Is UVGI, and Why Is It Incentivized?

What UVGI Is

Ultraviolet Germicidal Irradiation (UVGI) uses UV-C light to deactivate airborne pathogens, bacteria, and mold within HVAC systems or occupied spaces.

It is commonly installed:

• Inside HVAC ductwork
• Near cooling coils
• In upper-room air disinfection systems

What UVGI Benefits Are

UVGI improves both air quality and HVAC system performance:

• Reduces airborne pathogens and improves indoor air quality
• Prevents biofilm buildup on coils
• Maintains heat transfer efficiency
• Reduces airflow resistance caused by dirty coils

Unlike traditional ventilation strategies, UVGI enhances air quality without increasing outdoor air loads.

How UVGI Impacts Building Operations

UVGI plays a dual role in operations:

• Enhances occupant health and safety in high-density environments
• Improves HVAC system efficiency by keeping components clean

It is especially valuable in:

• Healthcare facilities
• Schools and universities
• Commercial spaces with high occupant turnover

UVGI is a supplemental ventilation strategy, meaning it works alongside filtration and outdoor air systems.

How Financial Incentives Apply to UVGI

UVGI incentives are emerging but expanding as indoor air quality becomes a priority.

Utilities support UVGI because:

• It can reduce the need for energy-intensive ventilation increases.
• It improves system efficiency through cleaner components.
• It aligns with health-focused building initiatives.

Incentives are most common in sectors where air quality directly impacts operations, such as healthcare and education.

How Do These Technologies Work Together?

ARC, ERV/HRV, and UVGI each address a different layer of HVAC performance:

When combined, these technologies create a high-performance HVAC system that is efficient, responsive, and aligned with modern energy standards.

FAQ

What HVAC upgrades qualify for the highest incentives?

Advanced Rooftop Controls (ARC) typically qualify for the highest incentives because they deliver measurable energy savings and reduce peak demand, which utilities prioritize.

How much energy can ARC systems actually save?

ARC systems can reduce HVAC energy consumption by 20–50%, depending on system design, operating hours, and existing control conditions.

Are ERV and HRV systems worth the investment?

Yes. ERV and HRV systems reduce heating and cooling loads by recovering energy from exhaust air, often improving efficiency by up to 80% of recovered energy, which lowers long-term operating costs.

Does UVGI replace ventilation systems?

No. UVGI is a supplemental technology. It improves indoor air quality and system cleanliness, but does not replace required outdoor air ventilation or filtration systems.

How do HVAC controls support Predictive Maintenance?

Modern HVAC controls monitor system performance in real time. They identify patterns like excessive runtime or temperature drift, allowing maintenance teams to fix issues before equipment fails.

What is the role of OpenADR and GEB in HVAC systems?

OpenADR enables automated demand response, allowing HVAC systems to adjust energy use during peak demand events. Grid-Interactive Efficient Buildings (GEB) strategies allow buildings to dynamically manage energy use, improving efficiency and supporting grid stability.

HVAC Incentives Now Reward Smarter Systems

HVAC incentives are evolving to support technologies that improve system performance rather than replace equipment. ARC, ERV/HRV, and UVGI stand out because they address how HVAC systems operate.

If your facility is planning an HVAC upgrade, Incentive Rebate360 can help you identify available programs, reduce upfront costs, and implement solutions that deliver long-term operational and financial value. Contact us today by calling 480-653-8180, emailing [email protected], or scheduling a call that fits your needs by clicking the button below!