In this study, the economic and environmental feasibility of air-to-air and geothermal heat pump systems is examined. The significance of the insulation level of the envelope on the economic and environmental feasibility of heat pump systems is demonstrated. The goal of this study is to quantify the extent to which the local climate and the building insulation level influences the economic and environmental feasibility of a geothermal water-to-air heat pump system and an external air-to-air heat pump system: In this study, the seasonal coefficient of performance SCOP is predicted for both heat pump systems for a residential building with varying insulation levels representative locations of the United States. The SCOP of both heat pump systems is calculated in a dynamic calculation process for use in a representative residential building with three different insulation levels of the building envelope. Results show a huge sensibility of SCOP values and feasibility studies towards the insulation level of the building envelope and the location. (C) 2014 Elsevier Ltd. All rights reserved.