Economic analysis of vertical ground source heat pump systems in Melbourne

Abstract

This study assesses some economic indicators for residential vertical Ground Source Heat Pump (GSHP) systems in Melbourne, Australia. Publicly available data on the performance and costs associated with such systems is rare. To redress this issue, detailed cost breakdowns are reported herein based on actual installation costs. The average upper bound capital cost is found to be around AUD 31,000, with lower costs possible depending on many factors, particularly when considering the early stage of development of the GSHP industry in Australia. Using the gathered cost data as well as other performance data such as recorded average coefficients of performance of 3.8 and 3.6 for heating and cooling respectively, several economic indicators are used to evaluate alternative heating/cooling systems. The analyses found that for a design life of 20 years, an Air Source Heat Pump (ASHP) system is marginally more financially attractive than a GSHP system; however, for a design life of 40 years, GSHP system provide considerably more savings than other alternatives including ASHP systems. The relatively low rate of return for GSHP systems over the first 20 years is due to current high capital costs as well as the mild weather conditions in Melbourne. Climate change was also factored into the economic analyses, with only minor effects observed. Finally, a scenario with government incentives was found to make GSHP systems much more financially attractive, a tax credit on capital cost of as low as 8% was found as such threshold for a design life of 20 years.