Payback period for a ground source heat pump system

A discounted cash flow model (DCF) is implemented in order to investigate the economic aspects of ground source heat pump (GSHP) for heating and cooling, in comparison to traditional condensing boiler (CB). The DCF model allows the analysis of investment costs, operating costs and revenues of the two different systems in order to understand if the GSHP outperform its conventional counterpart in coming years, explicitly taking account for factors as price/cost growth. The whole analysis is performed adopting a parametric approach, in which all the previous terms are linked to energy labels, degree-days and energy mix ratios (EMRs), the latter obtained as ratio between the full unit cost of electricity and natural gas paid by householders. Relating to different EMRs, the discounted pay back periods are presented in decision support matrixes in which energy labels and degree-days are the row/column variables, to confront the benefits of choosing between GSHP versus CB. The results show that all higher energy labels have a good profitability ratio between costs and payback periods and demonstrate that GSHP system does pay off. Lower labels become interesting when the EMR drops to 0,25 and the gas price goes up 0,70 €/Nm3. Some considerations are also presented in order to express environmental aspects.