Component optimization studies during the last twenty years, point to the use of ground source heat pump systems to minimize building heating and cooling costs. Modem computational tools enable building energy simulation for a typical year with a time step of the order of minutes. This allows improved insight in the details of its transient operation and may significantly affect the form of the objective function employed in the component optimization procedure, as demonstrated in this paper. A 3-zone residential building located in Volos, Greece, is modelled along with its chiller - boiler or heat pump, hydronic distribution system and their controls, in the TRNSYS 16 environment. Yearly performance of the building with the reference, chiller-boiler system, is compared to that of the alternative, ground source heat pump system. Comparative year-round simulations are employed to demonstrate the expected transient and overall energy balance effects of control settings, chiller or heat pump COP characteristics, equipment sizing and other design parameters.