Abstract Retrofitting of fossil fuel powered hot water radiator heating systems of the existing buildings by groundwater heat pumps can provide significant energy savings followed by economic and environmental benefits. The paper describes the procedure for selection of optimal low-temperature groundwater heat pump vapor compression cycle based on thermodynamic analysis of applied high temperature heat pump heating system. In comparative energy and exergy analysis observed are six different heating cycles, five of which utilize two-stage refrigerant compression, and one operate as basic one-stage heat pump system with an auxiliary heater. The systems validation is performed accounting strongly for the boundary conditions of the selected location.