The heat supply system combining a conventional boiler with an air source absorption heat pump (ASAHP) has been evaluated as having great potential in energy saving and emission reduction. However, an economic analysis needs to be performed before its wide applications. To improve the economy of ASAHP from a design perspective, a year-round simulation and techno-economic analysis are conducted. Results show that the energy saving rate (ESR) does not decrease much when the relative design capacity of ASAHP is within 50-100%. At a relative design capacity of 75% in Harbin, 35% in Shenyang, 50% in Beijing, and 50% in Zhengzhou, ESR can reach 21.6%, 24.3%, 26.2% and 26.3%. Given an ASAHP price of 1.5 CNY/W and a gas price of 4.0 CNY/Nm(3), the payback period is 6.8, 6.6, 4.1 and 4.6 years in these four cities, at a 50% relative design capacity. There is a conflict between ESR and the payback period, but a small sacrifice (1.5-6.0%) in ESR can contribute a great reduction (38-48%) in the payback period. The heating period and energy price in the local area, as well as the expected ESR and acceptable payback period should be comprehensively considered for a better energy efficiency and economy. (C) 2014 Elsevier B.V. All rights reserved.