A preliminary study of a solar-heated low-temperature space-heating system with seasonal storage in the ground has been performed. The system performance has been evaluated using the simulation models TRNSYS and MINSUN together with the ground storage module DST. The study implies an economically feasible design for a total annual heat demand of about 2500 MWh. The main objective was to perform a study on Anneberg, a planned residential area of 90 single-family houses with 1080 MWh total heat demand. The suggested heating system with a solar fraction of 60% includes 3000 m(2) of solar collectors but electrical heaters to produce peak heating. The floor heating system was designed for 30 degreesC supply temperature. The temperature of the seasonal storage unit, a borehole array in crystalline rock of 60,000 m(3), varies between 30 and 45 degreesC over the year. The total annual heating costs, which include all costs (including capital, energy, maintenance etc.) associated with the heating system, were investigated for three different systems: solar heating (1000 SEK MWh(-1)), small-scale district heating (1100 SEK MWh(-1)) and individual ground-coupled heat pumps (920 SEK MWh(-1)). The heat loss from the Anneberg storage system was 42% of the collected solar energy. This heat loss would be reduced in a larger storage system, so a case where the size of the proposed solar heating system was enlarged by a factor of three was also investigated. The total annual cost of the solar heating system was reduced by about 20% to about 800 SEK MWh(-1), which is lower than the best conventional alternative. (C) 2000 Elsevier Science Ltd. All rights reserved.