This project was undertaken to determine the acceptability and operational characteristics of vertical ground-coupled heat pumps in southern climates. Summarises the cooling and heating performance of an installation in a 1,600-ft (150-m2) residence in Alabama (Kavanaugh and Deerman 1989). The system was installed in May 1988. The heating and cooling loads of the 30-year-old structure were 43,000 (13 kW) and 32,000 Btu/h (10 kW) respectively. The water-to-air heat pump operated 10% below rated efficiency in cooling and 15% below efficiency in heating. However, energy use and demand were substantially reduced. Based on the local 1989 residential rate structures, the average monthly utility bill was 83 dollars, with a high of 98.15 dollars (February) and a low of 66.65 dollars (June). The system replaced an 80,000-Btu/h horizontal gas furnace and a 9.6 SEER split-system cooling unit (ARI 1987). Annual savings were 217 dollars, resulting in a seven-year simple payback based on a 1,500 dollars added cost. Had the unit operated at rated efficiency, the savings would be 244 dollars a year with a simple payback of 6.1 years. Payback would be 10.2 years based on 2,500 dollars system added cost. Although the month of January was much milder than normal, August and September were warmer. Overall, both the test year and the preceding comparison year were close to normal in terms of total load placed on the heating and cooling system. The system also has a levelling effect on demand and monthly energy use. The heat pump operated at mid-range efficiency during periods of peak demand on the utility grid. Demand for hot water is substantially reduced on very hot and cold days, since a heat recovery unit was used. While cost savings were very good an additional 20% to 30% reduction is possible with the improved water-to-air heat pumps that are now available.KEYWORDS: testing, site testing, vertical, soil heat pumps, heat pumps, USA, cooling, heating, performance, case studies, payback period, costs, economics, water air heat pumps, energy consumption, domestic, energy conservation, comparing, heat load, cooling load, heat recovery