Technical and Economic Evaluation of Ground Source Heat Pump

Ground source heat pump systems utilize shallow underground geothermal energy for both heating and cooling. These systems offer stable and relatively high heat source temperatures throughout the year, making them more efficient than traditional heating and cooling systems, especially in terms of coefficient of performance (COP). Despite their efficiency, the widespread adoption of ground source heat pumps faces challenges, particularly due to high initial costs. Understanding the economic feasibility of these systems is crucial for investors. This paper conducts a comprehensive technical and economic analysis of various ground source heat pump configurations to provide insights into their long-term viability.

1. **Technical and Economic Evaluation Methods and Parameters**

The main technical parameters considered include heating and cooling loads, while the economic parameters cover initial investment, annual operating costs, total annual cost, cash flow statements, and related financial metrics.

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

It encompasses operating costs like water, electricity, fuel, sewage charges, staff salaries, management fees, depreciation, and maintenance expenses.

1.1.3 Operating Costs

This refers to the total annual cost excluding depreciation charges.

1.1.4 Cash Flow Statement

Using the cash flow method, key economic indicators such as the internal rate of return (IRR), net present value (NPV), net present value ratio (NPVR), and payback period are calculated.

(1) Net Present Value (NPV): It represents the sum of discounted net cash flows over the project's lifetime, calculated using the formula:

Where NPV is the net present value, CI is the annual cash inflow (including revenue from heating or cooling, salvage value, and working capital recovery), CO is the annual cash outflow (including capital investment, operating costs, and taxes), ic is the benchmark rate of return (8% in this case), and n is the project duration (including construction and operational periods).

(2) Net Present Value Ratio (NPVR): This measures the profitability per unit of investment, calculated as:

Where NPVR is the net present value ratio, Ip is the present value of total investment, and It is the investment in year t. A project is considered feasible only if both NPV and NPVR are greater than zero. In multi-project selection, projects with higher NPV are preferred when funds are sufficient. However, when resources are limited, NPVR becomes a more relevant indicator to evaluate the efficiency of investment returns.

(3) Investment Payback Period: This is the time required to recover the initial investment. The static payback period does not consider the time value of money, while the dynamic payback period does. The formulas are:

and

1.2 Calculation Parameters

1.2.1 Weather Parameters

The indoor heating design temperature is 20°C, and the cooling design temperature is 27°C. Outdoor temperatures are based on the average daily values in Harbin in 2000. There are 180 heating days and 60 cooling days annually, with 18 hours of heating and variable cooling hours depending on actual demand.

1.2.2 Calculation Object

A residential building is selected as the calculation object. The maximum heating load is 70 W/m² for an area of 10,000 m². The cooling load is also set at 70 W/m², with the cooling area matching the system’s capacity.

1.2.3 Ground Source Heat Pump System

The system is designed for dual-use heating and cooling. Three types of primary drivers are analyzed: electric motor, diesel engine, and gas engine. Auxiliary heat sources include electric, oil, and gas boilers. Waste heat from diesel or gas engines is recovered. The COP for heating and cooling is 3.1 and 4.0 respectively, while the COP for single air conditioning is 2.9. Thermal efficiencies for electric, oil, and gas boilers are 1.0, 0.85, and 0.85, respectively. The waste heat recovery rate for diesel and gas engines is 0.60. The system uses vertical boreholes with a depth of 100 meters, HDPE pipes, and a heat transfer rate of 35 W/m² per meter. The system has a lifespan of 15 years and a total heating capacity of 700 kW.