A new air-source heat pump technology optimized for cold climates was designed and fabricated by the authors in close cooperation with three industrial partners. The constructed unit will undergo a field demonstration in a military barrack to identify heat pumps as cost effective systems that have less primary energy consumption when compared to traditional cold climate heating methods. A simulation model developed in EES predicted the designed heat pump performance at different ambient conditions. The EES results were incorporated with a TRNSYS model to couple the military barrack building load with the available heat pump capacity using weather data. The TRNSYS model enables the assessment of the field demonstration performance during the heating season. The heat pump design is based on two-stage compression with economizing. Commercially available components were selected for all parts of the heat pump. A variable-speed scroll compressor is used as the high-stage compressor matched with a tandem fixed-speed scroll compressor used as the low-stage compressor. The configuration has a predicted capacity of 18.34 kW (62,580 BTU/h) at the design ambient temperature of -20 o C (4 o F) based on the EES simulation results. The building has a heating load of less than 18 kW for more than 95% of the heating season that lasts 8 months out of the year. The heat pump design therefore is predicted to satisfy the building heating load for the entire heating season. The heating season COP based on TRNSYS hourly simulation results is 3.67 with a yearly heating capacity of 30,970 kWh (105,674 kBTU) and 8,438.37 kWh (28,793 kBTU). The CCHP simulations predict over 30% savings in primary energy and CO2 emissions with a 25% cost savings for annual heating energy use compared to an 85% AFUE natural gas furnace.