In order to evaluate and improve the design of space heating systems with groundwater source heat pumps (GWHP), common design practices should be examined. In this paper, a GWHP system with common design is studied. The COP of the heat pump is 3.5 at design condition. The system is divided into five subsystems, and exergetic cost analysis is performed on it based on structural theory of thermoeconomics. The results show that the three largest relative exergy destructions and lowest exergy efficiencies occur in power generation and distribution, heat pump, and terminal unit subsystems with relative exergy destructions of 71.2%, 17.1% and 7.02% and exergy efficiencies of 32.8%, 54.8% and 65.6% respectively. The three subsystems also have the largest increases of unit exergetic costs of 2.04 W/W, 2.15 W/W, and 2.73 W/W respectively. Therefore, designers of GWHP space heating systems should pay close attention to heat pump and terminal unit subsystems, especially to the latter one because of its larger increase of unit exergetic cost. The unit exergetic cost of the system final exergetic product is 7.92 W/W. This value can be used to evaluate the system and compare it with others from the viewpoint of energy conservation. (C) 2010 Elsevier B.V. All rights reserved.