The air-conditioning industry is starting to feel the heat, and not just from the scorching temperatures that are being felt around the world. It's getting tougher to squeeze more efficiency from today's cooling technology, offering little relief anytime soon for consumers fuming from summer electric bills.

(Related: Heat Wave: 2010 to Be One of Hottest Years on Record)

Century-old refrigeration technology is simply nearing its limits in energy efficiency. The focus now is on alternative technology, with potential breakthroughs on the horizon.

"Cooling systems in general have been a tougher nut when looking for efficiency," says Mark Modera, director of the Western Cooling Efficiency Center at the University of California, Davis.

For one, air-conditioning units don't get replaced as often as, say, light bulbs or even refrigerators. It takes longer for more efficient models to spread into homes or businesses. Researchers also struggle to make new cooling technology as cheaply as the refrigeration pioneered by Willis Carrier in the early 1900s. "Now there is more attention being given to it," Modera says.

Why dehumidify?

His center, for example, is just three years old. Its focus on the Western United States reflects growing sophistication in the chase for cooling efficiency, which varies in different climates. AC units built to U.S. national standards, for one, dehumidify the air—a waste of energy in the arid Southwestern states. The U.S. Congress a few years ago authorized new air conditioning (and heating) standards that will divide the country into North, South and Southwest regions.

Even so, the standards expected from the U.S. Department of Energy next year will cut power use less than previous rounds, which over several decades have sliced a typical air conditioner's energy use by about 50 percent, says Andrew deLaski, executive director of the Appliance Standards Awareness Project. Proposed standards put together by his and other groups would cut average AC energy use by about 8 percent. "Just because we don't see major improvements with new standards does not mean they aren't in our future," deLaski says. "It will take a breakthrough in technology. What that will be we don't know yet."

Conventional, refrigerant-based AC uses so much energy because of mechanical compressors that squeeze the liquid coolant. The result is that air-conditioning accounts for about 8 percent of the energy use in a typical American home, according to the U.S. Energy Information Administration.

(See Quiz: What You Don’t Know About Air Conditioning)

Even more important, cooling accounts for a disproportionate share of electric utility costs. AC drives peak energy demands that dramatically swing consumption, with some of the worst swings in the Southwestern states. High daytime temperatures there contrast with cooler readings at night. That means afternoon peaks drive much of the need for added power plants and transmission lines.

Modera's center is pursuing several technologies with particular promise in the Southwest. They include radiant cooling that pipes chilled water around a building or systems that use chilly nights to inexpensively produce ice that can help make a building comfortable during the day.

Some of the most promising advances are in evaporative cooling, which uses water to draw heat from air just as perspiration cools a body. It's already used in "swamp coolers" that tend to be more popular in drier climates.

Swamp coolers got their name because they add humidity and, if not properly maintained, a musty smell to the air. Indirect evaporative cooling keeps the water away from the air going into the building, much as the radiator in a car sheds heat without losing liquid coolant to the air. Companies are already producing early indirect evaporative models that can cut cooling energy use by 80 percent in dry climates.

These systems aren’t ideal for humid climates, however, since indirect evaporative cooling doesn’t remove humidity from the air as conventional air conditioning does. Evaporative cooling also can't shed as much heat in humid air, much as perspiration doesn't cool a human body as well on muggy days. But other innovations could extend evaporative cooling to wetter regions.

A dry swamp cooler

An evaporative cooler developed at the National Renewable Energy Laboratory uses drying compounds, or desiccants, to pull moisture from the air. The idea isn't new, but is now more feasible with advances in technology, such as membranes that employ nanotechnology to keep the desiccants separate from the water.

A "desiccant-enhanced" prototype at the lab needs less than half, and perhaps 90 percent less, of the energy of a conventional air conditioner. It could be in field trials in three years and on the market soon after, says Eric Kozubal at the renewable energy lab.

The lab, which is part of the U.S. Department of Energy, would license the technology for production by private companies. Several air conditioner makers have already expressed interest, Kozubal says.

“I think people in the air-conditioning business can see the end of refrigeration technology,” he says. “It’s clear something has to take its place."