This paper presents the development and application of a three-dimensional (3D) numerical simulation model for U-tube borehole heat exchangers (BHEs). The proposed model includes the thermal capacities of the borehole components, viz., the fluid inside the tubes, as well as the grouting material, making it possible to consider the transient effects of heat and mass transports inside the borehole. In this approach, the use of simplified thermal resistance and capacity models (TRCMs) provides accurate results while substantially reducing the number of nodes and the computation time compared with fully discretized computations such as finite element (FE) models. The model is compared with a fully discretized FE model which serves as a reference. Furthermore, the model is used to evaluate thermal response test (TRT) data by the parameter estimation technique. Comparison of the model results with the results of an analytical model based on the line-source theory further establishes the advantage of the developed 3D transient model, as the test duration can be shortened and results are more accurate. (C) 2011 Elsevier Ltd. All rights reserved.