Technical and Economic Evaluation of Ground Source Heat Pump

Ground source heat pump systems utilize shallow underground geothermal resources for heating and cooling, offering a more sustainable and efficient alternative to traditional HVAC systems. With a relatively stable and high heat source temperature throughout the year, these systems achieve significantly higher Coefficient of Performance (COP) in both heating and cooling modes compared to other heat pump technologies. Despite its growing adoption globally, the technology still faces challenges in widespread implementation, particularly due to high upfront costs. Understanding the economic viability of ground source heat pumps is crucial for investors and decision-makers. This paper presents a technical and economic analysis of various system configurations to evaluate their cost-effectiveness and long-term benefits.

1. Technical and Economic Evaluation Methods and Parameters

The main technical parameters considered include heating load and cooling load, while economic parameters involve initial investment, annual operating costs, total annual cost, and cash flow analysis. These metrics are essential for assessing the financial performance of different system designs over time.

1.1 Main Economic Parameters

1.1.1 Initial Investment

This includes all costs associated with the installation of the ground source heat pump system, such as civil works, equipment procurement, installation, design, supervision, and contingency expenses.

1.1.2 Annual Total Cost

Refers to the overall operational expenses of the system, including energy consumption (water, electricity, fuel), sewage charges, labor, maintenance, and depreciation of equipment.

1.1.3 Operating Costs

Represents the total annual cost excluding depreciation, focusing on recurring expenses like energy, maintenance, and labor.

1.1.4 Cash Flow Statement

The cash flow method is used to calculate financial indicators such as internal rate of return (IRR), net present value (NPV), net present value ratio (NPVR), and payback period. These metrics help determine the financial feasibility of different system options.

Net Present Value (NPV): NPV is the sum of discounted net cash flows over the project’s life. It is calculated using the formula: $$ \text{NPV} = \sum_{t=0}^{n} \frac{(CI_t - CO_t)}{(1 + i_c)^t} $$ Where $ CI_t $ is cash inflow, $ CO_t $ is cash outflow, $ i_c $ is the benchmark rate of return (8% in this case), and $ n $ is the project duration.

Net Present Value Ratio (NPVR): This measures the profitability per unit of investment and is calculated as: $$ \text{NPVR} = \frac{\text{NPV}}{\sum_{t=0}^{n} \frac{I_t}{(1 + i_c)^t}} $$ Where $ I_t $ represents the investment in each year.

A project is considered feasible if both NPV and NPVR are positive. In cases of multiple options, projects with higher NPV are preferred when funds are sufficient. However, when capital is limited, the NPVR becomes a more critical indicator for evaluating investment efficiency.

Investment Payback Period: This refers to the time required to recover the initial investment. There are two types: static (ignoring the time value of money) and dynamic (considering the time value of money). The formulas are: - Static payback period: $$ PI = \frac{\text{Initial Investment}}{\text{Annual Net Income}} $$ - Dynamic payback period: $$ PI' = \sum_{t=0}^{T} \frac{\text{Net Cash Flow}_t}{(1 + i_c)^t} $$

1.2 Calculation Parameters

1.2.1 Weather Parameters

The indoor heating design temperature is set at 20°C, and the cooling design temperature at 27°C. Outdoor temperatures are based on historical data from Harbin in 2000, with 180 heating days and 60 cooling days. Heating hours are assumed to be 18 per day, and cooling hours correspond to actual usage.

1.2.2 Calculation Object

The study focuses on a residential building with a heating area of 10,000 m². The maximum heating load is 70 W/m², and the cooling load is also 70 W/m², based on standard design criteria.

1.2.3 Ground Source Heat Pump System

The system is designed for dual-use heating and cooling. Three driving sources were considered: electric motor, diesel engine, and gas engine. Auxiliary heat sources included electric boilers, oil boilers, and gas boilers. Waste heat recovery was implemented for diesel and gas engines, with a recovery efficiency of 60%. The heat pump has a heating COP of 3.1, cooling COP of 4.0, and a single air conditioning COP of 2.9. Electric boilers have a thermal efficiency of 1.0, while oil and gas boilers operate at 85% efficiency. The buried pipes are vertical, 100 meters deep, made of high-density polyethylene (HDPE), with a heat transfer rate of 35 W/m. The system has a lifespan of 15 years and a total heating capacity of 700 kW.